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ANNUAL REPORT 2011-12

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ManagementDiscussionand Analysis

Overviewbusiness in the following ways:

1. It lead to delays in projectcompletion leading to costover runs

2. It resulted in lower revenuerecognition and sales

3. Payment delays that increasedWorking Capital and henceincrease in Interest Cost.

Total impact of all this, onprofits of our SystemsIntegration business was to theorder of ` 300 Crores inRevenue and ̀ 80 Crores in Pre-Tax Profit.

• Natural calamities in South East Asiawhich disrupted supply chain of theIT hardware industry: In October 11,floods in Thailand significantlydamaged factories that make HardDisk Drives (HDD). As a result, pricesof hard disk drives went up by asmuch as 50% for the period fromNovember 2011 - March 2012. Thesefactors caused an increase in thecost of PCs.

While the financial impact of thesechallenges has been steep, thesechallenges essentially impacted ourcompany's B2B (Business to Business)business segments that provide IT andoffice automation hardware and SystemsIntegration projects to public sector andenterprises. These business segmentshave long term contracts and hencehave constraints in passing on an

unforeseen cost escalation to thecustomer. These businesses aredependent on the government sectorspend on projects and on capex spendof the private enterprises. Last year, thisspend in the economy went downsharply and hence, its impact was seenby us in terms of a 19% drop in sales ofour B2B Solutions and SI businesses.These business segments constituteabout 25% of your company's portfolio.Your company is working on strategiesto mitigate impact of these challengesfaced by some of its businesses.

All the other business segments of thecompany, which make up almost 75% ofour business portfolio, fared quite welland posted good growth in profits. OurConsumer & SMB Computing productsbusiness grew 17% y-o-y in sales with asubstantial improvement in theoperating margins. Newly launched HCLcare business doubled in size and ourEnterprise Services registered a growthof 6% y-o-y in sales along with anexpansion in service margins. Ourtelecom products distributionmaintained a marginal 1% growth insales, despite a first time decline in thevalue of telecom products market inFY12. HCL Learning division registered agrowth of over 75% y-o-y.

Other significant developments duringFY12 that have positioned your companywell for future success are:

• Renewal of agreement withNokia: Distribution of digitallifestyle products continues to be an

The Year 2011-12 was a challenging yearfor us as we were faced with manysimultaneous adverse changes in theexternal environment. We had not seenchallenges of this magnitude in therecent past. These challenges impactedthe financial performance of thecompany in the year. Some of the keychallenges faced by the company duringFY12 were as given below:

• Depreciation of Indian Rupee: Ourbusiness requires us to importsignificant value (~ ` 2000 Cr.) ofelectronic components, softwareand products every year. Hence, anydepreciation of Indian Rupee meansincrease in costs. During the yearFY12, Indian Rupee lost 19% againstUSD. Total impact of thisdepreciation on your Company'sprofit in the year FY12, was to thetune of `133 Crores (` 65 Croresreported as ERD loss and Rs.68Crores as Margin drop) in ourHardware and System IntegrationBusinesses.

• Slowdown in decision making inthe core sector: Large percentageof our B2B (Business to Business)business comes from theInfrastructure and public sector.Year 2011-12 saw a slowdown anddelay in many projects in thesesectors. Government procurementwas lower, leading to a substantialdrop in businesses dependent ongovernment spending. This slowdown had an adverse impact on the

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area of focus for us. In August 2011,we renewed our agreement withNokia for distribution of theirproducts. This agreement will againcome up for renewal on 31stDecember 2014. As per theagreement, we are the NationalDistribution Partner for NationalOrganised Trade and for all thetowns below a certain population.

• Your Company was selected forlarge and prestigiousengagements during the year.

• UIDAI Managed ServicesProgram (MSP): YourCompany has bagged a largecontract from UIDAI forimplementing and managingthe Central ID Repository. This7 year engagement is one ofthe largest IT managed servicesengagement ever to beawarded in India. LOI wasreceived during the year, whichwas subsequently converted tocontract in August'12.

• Tactical CommunicationSystem: A special purposecompany comprising of L&T,Tata Power & HCL Infosystemshas been selected for thedesign and developmentphase of the project TacticalCommunication System forIndian Army. This is a first such`make' program of the IndianDefence sector to be awardedto the private sector. If theprototype, developed underthis phase of the project isdeemed to be successful, thenit can make the SPC eligible forsupply of tacticalcommunication system to theIndian army.

• We incubated many future growthdrivers during the year

• HCL Learning- We launchedDigiSchool last year and thesesolutions are now taking agood foothold in some of theleading schools in the country.In June this year, we acquired acontent developmentorganization, Edurix, (part ofAttano Media and EducationPrivate Ltd). Edurix designs andimplements content for the

K-12 education segment. Withacquisition of this capability,HCL Learning now hascapability to customize contentfor devices like tablets, donglesand for online platforms.

• HCL Global Touch & HCL CareServices- In July last year, westarted offering maintenanceand support services to users ofPCs and Smart-phones in theNorth America remotely. Weare seeing good growth ofthese services. During the yearFY12, we also built our supportservices offering for Indianconsumers of multiple brandsof PCs and phones. Thisoffering is now being taken tothe market through ournationwide network of HCLCare support centres backedup by trained servicetechnicians, remote supporthelp desks and hardware repairfactories.

• HCL `ME' Tablets- HCLlaunched its tablets in the valuesegment in late 2011-12. Theseproducts have taken goodfoothold in the market andhave a high market share in thevalue segment. Tablet market isexpected to grow at a veryrapid rate in India over the nextfew years.

• Overseas Expansion

1. Africa & SAARC Nations

• Your Company increasedfootprints in SAARCnations by establishingpartner network throughrenowned ICTorganizations inrespective regions. Weestablished dedicatedhelp line for support ofHCL products in Sri Lankaand computerized over400+ schools in EasternProvince of Sri Lanka.

• Your Company wasappointed as a strategicpartner to theGovernment of Ghana(Ministry of ICT ) for itsvarious ICT initiatives.

2. Middle East

• In FY 11 your Companyhad established itspresence in the MiddleEast through purchase of60% stake in a companycalled `NTS' (thenrenamed as HCL MEA). InAugust'12, Your Companyhas purchased the balance40% share in HCL MEA,which is now a 100%owned subsidiary. InMarch 2012, we furtherstrengthened ourpresence in the MiddleEast throughestablishment of asubsidiary in Qatar

• Your Company announceda strategic partnershipwith Consolidated Gulf Co.(GCG) and BDL Gulf FZCOin Dubai to make availableHCL Laptops, Desktopsand Tablets in Qatar.

• Your Company baggedvarious projects fromprestigious clients thisyear. We providedproducts, services andsolutions to organizationslike NITI Distributors Ltd.,Union National Bank, RAKCeramics, DP World,Ministry of Education,GEMS Education, EmiratesAirlines and Fly Dubai.Your Company also wonsecurity projects forvarious banks like HSBC,Abu Dhabi Islamic Bank,Citibank, Rak Bank,Emirates NBD andMashreq Bank.

3. Singapore

• Start of ManagedServices in Singapore -Your Company bagged avery prestigious long termcontract from InfocommDevelopment Authority(IDA), Singapore forproviding FacilityManagement Services tovarious Governmentagencies & Ministries andstatutory bodies in

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Singapore. As a part of thisengagement, we havenow established a state ofthe art RemoteI n f r a s t r u c t u r eManagement (RIM) centrein Singapore.

Aspire Business TransformationProgramme - In FY11 we kick started abusiness transformation program toprepare your company for the future. Wealso engaged a leading managementconsultant to help us program managevarious activities that were identified asa part of this program. Aspire hasenabled significant success stories for us.These include efficiencies in the go tomarket channel for computing products,improved credit control, cost reductionthrough infrastructure consolidation,and optimisation of service operations.These operational efficiencies havehelped us mitigate some of the impactof adversities in the externalenvironment, described earlier.

• As we pursue this transformationjourney, we believe the future HCLInfosystems will emerge with focusin the following areas:

1. Services. We aim to grow ourB2B and B2C servicesbusinesses. Our servicesbusiness will be global and theshare of higher value addedservices and Managed Serviceswill grow multi-fold.

2. Leading Position in Solutionsfor Technology enabledEducation

3. Strong Distribution Businessconsisting of unmatched reachin rural and urban markets anda large portfolio of partnershipsfor value added distribution.

4. IT and Office Automationsolutions businesses thatleverage our sales reach, strongpartnerships and with superiorservices.

As part of this transformation journey, wehave been assessing various options tooptimize and streamline operations ofour Personal Computing and TabletBusinesses. We have decided to form aWholly Own Subsidiary ("WOS") to holdthe Consumer and SMB PC/Tablet related

businesses (i.e. B2C computing, ECC,Mobility). This will enable this companyto have a sharper focus, streamlineoperations and achieve bettereconomies of scale in sourcing,manufacturing and marketing in theComputing Products business

This arrangement will also enable the SI& Services businesses to have flexibilityin partnering with a range of OEMpartners, as required by customers. Suchmulti-brand partnerships are critical forgrowth of our Solutions & Servicesbusinesses.

I. Quality Initiatives

Our Quality management iscommitted to adoption ofinternational best practices andstandards. Our Quality systemsconform to and are certified forvarious International standards.These include:

• Quality Management System -ISO 9001: 2008 for variousdivisions

• Environment Management -ISO 14001 certification

• Occupational Health andSafety - OHSAS 18001certification

• Information SecurityManagement - ISO 27001certification

• Software Capability MaturityModel - CMMI Level 3 (Level 5implementation in progress)

This has been further strengthenedthrough the following certificationsduring last year.

• Green Data Centre Platinumcertification by US Green

Building Council

• HCL Security ISO 9001certification

• Customer data centrecertification for ISO 27001

Documented Integrated QualityManagement System (iQMS)framework is deployed for allfunctions within the company.

Quality and process improvementhas also been linked with ongoingASPIRE excellence tracks. VariousCost and Lean improvementprojects have been undertaken as apart of Aspire program to helpreduce the cost and increase overallprofitability.

Focus on Customer Delight

Achieving Customer Delight hasalways been a key focus of yourcompany. Various initiativesundertaken in the past years havehelped us in retaining HCLInfosystems on the top for theFourth time in a row in CSA 2012(Customer Satisfaction Audit)conducted independently by IDC-DQ during Jan - Mar'12.

Out of 20 parameters, our companyhas got highest score in 12parameters. "Overall serviceoffering", "Ability to support multilocation", "Reliability of serviceprovided" and "Responsiveness ofthe team" being significant ones.

To further strengthen our customerfocus and management of ourengagement with top 100customers, during the year, weinstituted "Key Accounts Managers"and "National Service Account

Please note that the following scores are on a scale of 100 with 100 indicating the highestdegree of satisfaction

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Managers".

Major Global partners haverecognized the services we havebeen delivering to their customers,which is a testimony of our efforts.In a global assessment by NokiaCorporation, HCL Care Repair facilityreceived a 4.5 star rating whichranks this facility as the best in theworld on Quality & Processes.

II. Risks & concerns and riskmitigation

HCLI Enterprise Risk ManagementFramework is a key strategic tool inproactively ensuring that possiblebusiness risks are systematicallyidentified and addressed in aplanned manner.

Key risks that impact performanceof our various businesses are asfollows:

1. Technology churn andchanges in consumerpreferences: A shift incustomer preference from Net-books to more convenienttablets is example of one suchshift

2. Disruptions in the ITComponents supply chain:This supply chain is todayglobally integrated andunfortunately concentrated ina select few countries. Thisexposes the business to supplychain disruptions emerging outof any natural calamities orpolitical disturbances in thosecountries. We observed such adisruption last year in thesupply of HDDs

3. Changes in the portfolio orhealth of major distributionpartners: We have a largedistribution business and itsbusiness performance isdependent on performance ofsome of its key partners fromwhom it buys products. Highdependence on such selectpartners exposes the businessto potential risks associatedwith the health of thosepartners.

4. Exchange rate variation risk:With close to ` 2000 crore of

annual imports, we have a largeexposure to any FX ratevariation. A sharp drop in thevalue of Rupee can increase ourcosts and impact profitabilitysubstantially as was observedin FY 11-12.

5. Customer credit risk: In ourSystems Integration businesswe execute engagements thatrun into multiple years. Anychange in the financial healthof the customers during thetenancy of the engagementcan create a risk in terms ofdelays in receiving ourpayments. We do have anumber of old projects that arerunning currently with differentState utilities and public sectortelcos. Their financial healthdoes have a bearing onperformance of our Solutionsbusiness.

6. Delays in projects underimplementation: Any delay inthe project under executionexposes your company to costover runs as well as impacts theworking capital of the Projectbusiness.

7. Risks to the human capital ofthe company: Our ability tocontinue to do a great job forour customers and win in themarket place depends on ourability to attract, retain andengage top talent.

Your company plans, mitigatingactions against each of these risksand the effectiveness of the RiskManagement action plans aremeasured, tracked and reportedquarterly to the Boardappropriately.

Some key actions initiated underthe risk management programduring the financial year were asfollows:

• Credit controller has beenadded to assess customer andchannel partner credit risk andapprove credit limits for eachof them. Credit insurance hasbeen taken to cover creditoffered to the channelpartners.

• Cover taken under variousinsurance policies such asfidelity insurance and liabilityinsurance was enhancedduring the year, based onreview of the risks observedduring the year.

• In view of the volatility in theFX environment, the Board hasapproved a more stringenthedging policy on foreignexchange and the same hasalready been implementedacross the company to dealwith the volatile FXenvironment.

• Segregation of ProjectManagement Office (PMO) &Central Bid Team (CBT) fromsales to manage challenges inSystem Integration businessaround contract management& project estimation.

III. Internal control systems and theiradequacy

Your company has put in placeadequate controls that arecommensurate with its size and thenature of its operations. These havebeen designed to providereasonable assurance with regard torecording and providing reliablefinancial and operationalinformation, complying withapplicable statutes, safeguardingassets from unauthorized use orlosses, executing transactions withproper authorization and ensuringcompliance of corporate polices.These processes have been furtherrevised as a part of the iQMSframework and an upgraded controlframework has been put in placewith a roll out of a new AuthoritySchedule for all operations in thecompany.

Your company has an internal auditfunction and internal audit is basedon an Audit Plan, which is reviewedeach year in consultation with theAudit Committee. The Internal Auditprocess is designed to review theadequacy of internal control checksin the system and covers allsignificant areas of the Company'soperations such as accounting andfinance, procurement, employeerecruitment, statutory compliances,

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IT processes, safeguarding of assetsand their protection againstunauthorised use, among others.

Stringent disciplinary actions aretaken when ever internal audit findsnon compliance to corporatepolicies and controls.

IV. Human Resource Development

In today's competitive world, webelieve that our success iscontingent on our ability to attractand retain the best talent theindustry has to offer. Keeping this inmind, your company conductsvarious programs for Leadershiptraining, functional training &technical training at its TrainingCampus at Hyderabad. We carriedforward our iLead DevelopmentCentres, one year customiseddevelopment programs. Wecontinued training & developmentinitiatives to develop a robustleadership pipeline and provide ourpeople with extensive blendedlearning opportunities for careerdevelopment and growth.

As an enabler to our Businessexcellence initiative, ASPIRE, weintroduced a new PerformanceManagement System. Performanceis now assessed on two dimensions

- results as well as behaviours andcompetencies. We believe that ourpath to Business Excellence will begreatly enhanced through this newPerformance Management System.

During the year, your companyfocused on building a strongleadership bench required forsuccess in new upcoming growthareas. Many new Business UnitHeads and Functional Managerswere hired with relevant background and skill sets to theleadership team of the company.Current top leadership team of thecompany consists of a balanced mixof the top talent developedinternally through multi-functionalexposure within the company aswell as talent hired from outside.Your company has also focused onattracting talent at entry and midmanagement level and runs arobust Management Trainee andExec MBA recruitment program forrecruitments from top Managementand Engineering Colleges in thecountry.

Your company continues to getaccolades from third party agenciesfor being one of the best employersin the IT Industry.

The employee strength hasincreased from 7357 in 2011 to 7572in 2012.

DISCLAIMER

Certain statements made in this reportrelating to the Company's objectives,projections, outlook, estimates, etc. mayconstitute 'forward looking statements'within the meaning of applicable lawsand regulations. Actual results may differfrom such estimates or projections etc.,whether expressed or implied. Severalfactors including but not limited toeconomic conditions affecting demandand supply, government regulations andtaxation, input prices, exchange ratefluctuation, etc., over which theCompany does not have any directcontrol, could make a significantdifference to the Company operations.The Company undertakes no obligationto publicly update or revise any forward-looking statements, whether as a resultof new information, future events, orotherwise. Readers are cautioned not toplace undue reliance on any forwardlooking statements. The MD&A shouldbe read in conjunction with theCompany's financial statementsincluded herein and the notes thereto.Information provided in this MD&Apertains to HCL Infosystems Limited andits subsidiaries on a consolidated basis,unless otherwise stated.

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The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, and GenerallyAccepted Accounting Principles (GAAP) in India.

The Group's consolidated financial statements have been prepared in compliance with the standard AS 21 on Consolidation ofAccounts and presented in a separate section of the Annual Report.

The Management Discussion and Analysis on Financial performance relates to Consolidated Financial statements of the Companyand its subsidiaries. This should be read in conjunction with the financial statements and related notes to the consolidatedaccounts for the year ended June 30, 2012.

RESULTS OF OPERATIONS ` crores

COMMENTS ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012

Gross Business Income

Consolidated Revenues for the year were ` 10,856 crores as against ` 11,548 crores in the previous year.

New Initiatives in Learning, Tablets and Global Touch show potential of being the new growth drivers and recorded y-o-y growth.

Enterprise Business and Systems Integration business revenues were impacted as imports got dearer due to falling rupee, alsodue to delays in customer acceptances and in release of orders.

Particulars FY 12 FY 11Revenue 10,856 11,548Cost of Sales 9,752 10,384Gross Profit 1,104 1,164Personnel Costs 489 487Administration, Selling & Others 461 426Depreciation 46 38Operating Profit before Exchange differences 108 213Other Income 127 85Finance Costs 85 79Profit Before Tax before Exchange differences 150 219Exchange differences 66 (10)Tax Expense 14 60Minority Interest -2 1Profit After Tax 72 168EPS - Basic (in Rupees) 3.2 7.7

Telecom Distribution revenues dropped. While Nokia revenues remained stable during the year, portfolio revamp in some of themajor distribution partners such as Eastman Kodak, led to de-growth in Telecom Distribution business.

Discontinued Operations constitute Internet and related services business of the Company's erstwhile subsidiary HCL InfinetLtd. which was sold during the year.

Gross Margins

There was no change in Gross margins percentage in FY 2012 as compared to FY 2011. In absolute terms, gross margins were` 1104 crores as against ` 1164 crores in the previous year.

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Personnel Costs

Personnel costs increased marginally from ` 487 crores in FY 2011 to ` 489 crores in FY 2012.

Administration, Selling and Other Expenses

Administration, Selling & Other expenses increased from ` 426crores in FY 2011 to ` 461 crores in FY 2012. The increase wasmainly on account of provisions due to delay in customerreceipts ` 29 crores and increase in consultancy charges.

Better optimisation of resources during the year enabled thecompany to control its spend on infrastructure and sellingexpenses in comparison to previous year.

` crores

Particulars FY 12 FY 11Administration Expenses 213 226Selling & Distribution Expenses 56 71Provision for Doubtful Debts &Other current assets 66 37Legal, Professional & ConsultancyCharges 78 45Others 48 47Total 461 426

Particulars FY 12 FY 11Investment Income 49 41Operating Income 18 20Income from Lease rentals 28 13Gain on Sale of Infinet 26Others 6 11Total 127 85

Other Income In FY 2012 was ̀ 127 crores as against ̀ 85 croresin FY 2011.

Income from Lease rentals increased by ` 15 crores during theyear.

Finance Costs

Finance costs in FY 2012 were ` 85 crores as against ` 79 croresin FY 2011. The increase in finance cost was mainly due toincrease in the average interest rates and incrementalborrowings.

Exchange Differences

The Company uses foreign exchange forward contracts and options to mitigate the risk of movements in foreign exchange ratesassociated with payables and forecasted transactions in US Dollars. However, steep depreciation in Indian rupee against USDollar resulted in Foreign exchange loss of ` 66 crores during the year as compared to a gain of ` 10 crores previous year.

Unrealised exchange loss accounted for ` 34 crores during current year as against unrealised exchange gain of ` 4 crores inprevious year.

Pursuant to notification u/s 211(3C) of the Companies Act , 1956 the Company has deferred exchange loss of ` 11 crores arisingon translation of foreign currency items having a term of 12 months or more which will be amortised over the period of the item.

Profit before Tax

Profit before Tax in FY 2012 was ` 84 crores as against ` 229 crores in the previous year. Lower profitability was primarily due todifferential foreign exchange loss of ` 76 crores.

Tax Expense

The provision for current and deferred tax for the year was ` 14 crores.

Profit after Tax

Profit after Tax and Minority interest for FY 2012 was ` 72 crores as against ` 168 crores in FY 2011.

Earnings per Share

Basic EPS for FY 2012 was ` 3.2 per share as against ` 7.7 per share in FY 2011.

Depreciation

Depreciation increased from ` 38 crores in FY 2011 to ` 46 crores in FY 2012, due to increase in Fixed Asset base.

Other Income ` crores

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FINANCIAL POSITION

Net worth / Shareholders funds

Net Worth grew to ` 1911 crores as at June 30, 2012 from ` 1907 crores as at the close of the previous year.

Reserves & Surplus were ` 1867 crores at year-end after appropriating ` 78 crores for dividend and dividend distribution tax.

Dividend

During the year, the Company paid dividends aggregating to ` 3/- (150%) per fully paid up equity share of ` 2/- each.

Minority Interest

The Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore acquired the remaining 40% equity stakein HCL Infosystems MEA FZCO with effect from January 1, 2012. Accordingly, the Company doesn't have any exposure to minorityinterest.

Non Current Liabilities

Non Current Liabilities were at ` 307 crores as at June 30, 2012 as compared to ` 285 crores as at June 30, 2011 mainly due toincrease in creditors for material by ` 67 crores.

Current Liabilities

Current Liabilities were at ` 2808 crores as at June 30, 2012 as compared to ` 2510 crores as at June 30, 2011. Short term local andimport acceptances for materials increased by ` 271 crores year on year.

Fixed Assets

Net block grew to ̀ 404 crores as at June 30, 2012 from ̀ 369 crores as at June 30, 2011. The increase was mainly due to capitalizationon acquisition of EDURIX from Attano Media and Education Private Limited and goodwill on acquisition of HCL Infosystems MEAFZCO.

Non Current Assets

Non current assets increased by ` 199 crores to ` 452 crores as at June 30, 2012 from ` 253 crores as at June 30, 2011, mainly dueto increase in long term lease rent recoverable by ` 177 crores.

Investments

The investment decisions of the Company are guided by the tenets of Safety, Liquidity and Return. The Company constantlyreviews the portfolio of investments and rebalances it in line with the changing risk/return scenario.

Investments in Debt mutual funds and bonds at June 30, 2012 were ` 432 crores.

Inventories

Inventories as at June 30, 2012 were ` 707 crores as against ` 614 crores as at June 30, 2011.

Inventory turnover on sales in financial year ended 2012 was 15 times as against 19 times in the previous year.

` crores

Particulars FY 12 FY 11EQUITY AND LIABILITIESNet Worth 1,911 1,907Minority Interest - 4Non Current Liabilities 307 285Current Liabilities 2,808 2,510

Total 5,026 4,706ASSETSFixed Assets 404 369Non Current Assets 452 253Investments 432 607Current Assets 3,738 3,477

Total 5,026 4,706

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Trade Receivables

Debtors as at June 30, 2012 were ` 1241 crores as against ` 1337 crores as at June 30, 2011. However, Debtors as number of daysof sales in FY 2012 remained constant at 42 days as compared to FY 11.

Cash and Bank

Cash in hand & Balances with Bank in collection / disbursement accounts were ` 303 crores as at June 30, 2012 as against ` 266crores as at June 30, 2011. The increase is due to redemption of Investments.

Other Current Assets

Other current assets increased from ` 996 crores as at June 30, 2011 to ` 1217 crores as at June 30, 2012. Lease rent recoverableincreased by ` 60 crores, accrued revenue to be billed by ` 28 crores and contracts in progress by ` 127 crores.

CASH FLOW STATEMENT` crores

Particulars FY 12 FY 11Cash from Operating Activities 239 (13)Cash from/(used in) fromInvesting Activities (52) 91Cash used in Financing Activities (157) (122)Net Increase/(Decrease) in Cashand Cash Equivalents 30 (44)

Computer Systems and Related Products & Services

The segment operations comprise of• Manufacturing and Trading of computer hardware systems and sales of Tablets;• Executing comprehensive Systems Integration projects;• Offering Roll out, Infrastructure management and Security solutions in different Industry verticals;• Providing IT services such as Cloud computing, Facility management services;• Facilitating computer-aided learning projects in schools.

Changes in working capital particularly increase in outstanding material liabilities by ` 325 crores net of increase in inventory by` 93 crores resulted in inflow from operating activities in FY 2012.

Cash used in Investing activities in FY 2012 include inflow from redemption of Investments ` 214 crores and divestment of HCLInfinet Ltd. ` 24 crores offset by an increase in Lease rent recoverable of ` 237 crores and capital expenditure of ` 79 crores.

Cash outflows from Financing activities in FY 2012 include payment of interest ` 90 crores and dividend ` 130 crores. It alsoincludes increase in borrowings by ` 62 crores.

SEGMENT PERFORMANCE

As at the year end, the Company was operating in two segments namely Computer Systems and related products & services andTelecommunication & Office Automation. It also operated in another segment namely Internet & Related Services, which wasdiscontinued during the year.

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The subsidiary HCL Insys Pte Limited, Singapore and its step down subsidiary HCL Infosystems MEA, Dubai along with itssubsidiaries form part of the Computer Systems segment.

Segment revenues in FY 2012 were ` 3329 crores as against ` 3691 crores in previous year.

Segment PBIT before foreign exchange impact in FY 2012 was ` 48 crores as against ` 112 crores in previous year.

Segment PBIT after foreign exchange impact in FY 2012 was ` (0.3) crores as against ` 118 crores in previous year.

Falling rupee, delay in customer decision / acceptances and deceleration in the growth of the Indian economy resulted in lowerrevenues, cost overruns and receivables provisioning, impacting the segment.

Capital employed in the segment as at June 30, 2012 was lower at ` 1127 crores as against ` 1363 crores as at June 30, 2011.

Telecommunication & Office Automation

The segment operations comprise of

• Distribution of Telecommunication and other digital lifestyle products;

• Sales of Office automation products and providing related comprehensive maintenance and allied services;

• Providing repair services (including online support) for telecom and computing products.

The subsidiary Digilife Distribution and Marketing Services Ltd. (formerly known as HCL Security Limited) and HCL InvestmentsPte Limited, Singapore, and its joint venture Techmart Telecom Distribution FZCO, Dubai, form part of Telecommunication &Office Automation segment.

Segment revenues in FY 2012 were ` 7531 crores as against ` 7805 crores in the previous year. Nokia revenues remained stableduring the year. However, portfolio revamp in some of the major distribution partners such as Eastman Kodak, led to de-growthin this segment.

Segment PBIT before foreign exchange impact in FY 2012 was ` 172 crores as against ` 189 crores in the previous year.

Segment PBIT after foreign exchange impact in FY 2012 was ` 156 crores as against ` 193 crores in the previous year.

Capital employed in the segment as at June 30, 2012 was ` 416 crores as against ` 310 crores as at June 30, 2011.

Internet and Related Services

The segment provided Internet and related services through the Company's wholly owned subsidiary HCL Infinet Limited tobusiness enterprises. The offerings included Internet access services, virtual private network and other connectivity services.

The Company with effect from October 31, 2011 has sold its entire equity stake in HCL Infinet Limited.

Segment Revenue in FY 2012 was ` 23 crores as against ` 75 crores in the previous year. Segment PBIT in FY 2012 was ` (6) croresas against ` (11) crores in the previous year.

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Report on Corporate Social Responsibility

Social Responsibility & Community Development

HCL Infosystems remains committed to bring positive changein triple bottom line. Our vision for a sustainable future is basedon creation of knowledge and capabilities at larger societallevels. In this period HCL Infosystems worked closely withGovernment of India, National Skills Development Corporationand various state governments for capacity building of youthby imparting skill sets in IT and electronics. A number ofprogrammes have been undertaken by employee volunteersto enrich the lives of the disadvantaged, especially underprivileged children and the elderly. The initiatives taken includesponsoring child education - volunteering to teach IT, capacitybuilding of autistic children, organizing blood donation camps,collection drives and green movement to save theenvironment. Diversity of workforce and inclusion of all classesof society has been actively promoted through participationin job fairs exclusive to people with disabilities, additionalsupport for women employees and emphasis on recruitmentfrom smaller towns and far-flung areas of the country.

HCL INFOSYSTEMS Mindia

Mindia is all about saluting the prowess of the Indian mind. AtHCL Infosystems we believe that it is the Indian mind that isresponsible for our country's growth today. To celebrate theprowess of the Indian mind, HCL Infosystems has enunciatedthe concept of Mindia. Mindia is an apt manifestation of basicfeeling that binds all Indians together that of being 'Proud tobe an Indian'. The HCL Infosystems Mindia conclaves aim tobring an interactive platform where illustrious minds of Indiashare their perspective about the greatness and distinctnessof the Indian mind. HCL Infosystems Mind Conclaves are a seriesof events organized across the country to propagate thethought 'Mindia'. The conclave has already covered 26 citiesacross the country since its inception.

HCL INFOSYSTEMS Concert Series

HCL Infosystems Concert series is yet another initiative takenup by HCL Infosystems in association with The Indian HabitatCentre, Delhi and the Music Academy, Chennai. Through thisinitiative, HCL Infosystems provides a renowned platform toupcoming talents in the Indian performing art forms. HCLInfosystems 'Expression of the Mind' is the salutation to the'Gurus' of the Indian classical dance and music. This way HCLInfosystems strives to showcase the excellence in Indian artsand culture to discerning audiences and the series promises topresent hundreds of concerts featuring a variety of artists overseveral years of its continuation.

So far, close to 400 concerts have been successfully organizedunder HCL Infosystems concert series over the past 11 years.

CSR Initiatives during the year

Skilling India:

1. In its commitment to build capacities in IT and hardwaredomain HCL Infosystems signed a MoU with NSDC, tosupport Ministry of Home Affairs' goal of preparingtechnically qualified youth of J & K under Project Udaan.Over the next 5 years, 400 youth from the region will beimparted training.

2. Centre for Development of North East Region, IIM, Shillongand HCL Infosystems signed a MoU to promote ITintegrated development across areas of Education,Employability, Healthcare, e-Governance and FinancialInclusion. This partnership is aligned with the goals ofMinistry of Development of North East Region (DONER's)of leveraging IT to enhance opportunities for the citizensof the region.

3. HCL Infosystems is supporting NIELIT Itanagar, ArunachalPradesh for capacity building of the students in the IThardware industry. NIELIT is an autonomous body of theDepartment of Information Technology, Ministry ofCommunications & Information Technology, Governmentof India, providing industry relevant courses in the areasof Information, Electronics and CommunicationTechnology (IECT).

4. HCL Infosystems continued to support youth fromChindwara, Madhya Pradesh for employment. During theyear, 35 youths were trained on InfrastructureManagement.

Support to NGO's:

1. HCL Infosystems continued its support to organizationsworking for empowerment of women. NGOs like Goonj,Sukarya and Chetanalaya were supported throughthematic drives and campaigns.

2. To promote Right to Dignified livelihoods, HCL Infosystemssupported Social Enterprises by proving them access tocomputing devices for undertaking projects that wouldempower many underprivileged women.

3. HCL Infosystems supported Researchers andCommunication officers of NGO's in the sector of electroniccommunications. The trained officers of these NGO arenow better equipped to communicate with students andfamilies of special children through exciting audio visualapplications.

4. Under privileged children of 20 schools across India wereaided through contribution of books donated by HCLInfosystems employees at four locations - NOIDA, Chennai,Mumbai and Pondicherry.

Employee engagement drives:

1. Hundreds of employees donated blood during Voluntaryblood donation campaigns organized across HCL offices.

2. To provide opportunity to engage with Non Profitorganizations, CSR team at HCL Infosystems organized anevent "Engage" in NOIDA. The campaign facilitated HCLstaff to engage with NGO's to positively impact lives ofpeople at bottom of pyramid. Many employees of theorganization signed up as volunteers with the followingNGO's :

• Wildlife Trust: A Wild life conservation NGO operatingPan India

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• The Tehelka Foundation: A Rights based NGOworking with Juveniles.

• Action Aid: - An international NGO working withmarginalized communities pan India.

• Atmashakti Trust: - A Human Rights based NGOworking for food security in Orissa.

• Make-A-Wish Foundation: Fulfilling wish of criticallyill children.

• Don Bosco: Education and Skilling NGO aiming totrain and place 20 million youth from bottom ofpyramid.

3. HCL Infosystems staff pledged to support computerliteracy to Juvenile offenders in collaboration with TheTehelka Foundation at Sahyog Juvenile Correctional Homein Delhi.

4. Periodic Environment awareness campaigns are a part ofHCL Infosystems commitment to Environmentconservation. Last financial year witnessed three suchcampaigns on e-waste collection.

5. HCL women workforce was oriented on various legalprovisions and legal aids constituted within the judicialsystem of India during World Women's Day awarenessdrive.

Other CSR Activities

1. Uttarakhand Manufacturing Unit continued its support to7 Anganwadi's in the nearby villages.

2. Uttarakhand Manufacturing Unit provided free installationof computers to nearby Government schools owned byITI's.

3. Uttarakhand Manufacturing Unit provided training tostudents from Technical Institutes and Colleges in nearbycity & towns for enhancing their practical knowledge.

4. Health checkup camps were organized in NOIDA,Uttarakhand and Eastern region of HCL Infosystems.

5. Gift collection drive was organized in NOIDA, Puducherryand Mumbai for distribution of gifts amongstunderprivileged children.

Statement on non-discriminatory employment policy ofthe business entity

Equal Opportunities & Non Discrimination Policy: Accordingto this policy, HCL shall not discriminate against any employeeor job applicant on the basis of race, colour, religion, gender,age, sexual orientation, nationality, pregnancy status, maritalstatus, family status, different ability. All employment will bebased on the principle of equal employment opportunity.

Affirmative Action Policy: In 2011, HCL signed CII's Code ofConduct and institutionalized an Affirmative Action Policywithin the company. HCL Infosystems believes that equalopportunity in employment for all sections of society is animportant component of its growth and competitiveness.Inclusive growth is also interlinked with the growth anddevelopment of the country. Within this framework, HCLInfosystems commits to Affirmative Action for social equity forthe disadvantaged sections of the society (particularlyScheduled Castes and Scheduled Tribes) in the workplace.

Diversity has a positive impact on business and the companywill take steps to create equal employment opportunities. Thecompany does not and will not practice or support consciousdiscrimination in any form.

HCL Infosystems will not bias employment away fromapplicants belonging to disadvantaged sections of society ifthey possess the necessary skills and job credentials. Thecompany will make efforts for training of employees fromsocially disadvantaged sections of society in order to enhancetheir capabilities and competitive skills. HCL Infosystems'Affirmative Action initiatives are a part of our CorporateSustainability model.

Environment Sustainability Report

Highlights

• HCL was the first Indian company to introduce BEELabeled Laptops.

• Disclosure of carbon footprint as per global standardsand setting the target to reduce it year on year.

• Product design to support minimal power consumption.

• HCL was the first Indian ICT manufacturer to have all itsproducts RoHS compliant. HCL is continuing to worktowards elimination of toxic elements from products.

• HCL was the First ICT Company in India to launch Green-Bag Campaign. It was a no-cost-incurred e-wastecollection drive from HCL.

• Increase in collection of e-waste by 100% as compared tolast year.

HCL on Environment Management - Our Commitment toSocial Responsibility

We at HCL believe in building a symbiotic relationship betweenus and the manufacturers, consumers and recyclers with theaim to promote integration and sustainability in our operationsto have least stress on the environment.

HCL over the years has integrated and innovated products forits customer's giving key emphasis on product life cyclemanagement, commencing from sourcing, manufacturing toinstallation and recovery at the end-of-life of the product toensure protection of the environment, health and safety of allstakeholders.

In building a system to identify, develop and sustain themaintenance of an environment management system atcorporate level we have formulated a program that we proudlyrefer as HCL's ecoSafe.

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HCL's Environment Management Policy under HCL ecoSafe

Aim

The aim is to encapsulate knowledge, awareness, and keydevelopments on all environmental issues faced by today'sworld and to incorporate these in HCL's operations assuringour commitment in delivering quality products, solutions andservices

Objective

The key objective under HCL ecoSafe is targeted at integratingenvironmental management procedures into its businessprocesses thereby protecting the environment, health, andsafety of all its stakeholders. HCL commits to manufactureproducts that are environment friendly in all respects and arefree from hazardous chemicals.

HCL ecoSafe focuses on product lifecycle management toensure that our products right from when they aremanufactured, bought by customers, recovered at their end-of-life and recycled after useful life is done in anenvironmentally responsible manner.

HCL Ecosafe is a well structured Program, and its functions havebroadly been divided into 3 categories:

1. Chemical Compliance

2. E-waste

3. Energy

Chemical Compliance

HCL approach on chemical compliance is always been a proactive one. All our desktops, laptops and AIO are RoHScompliant and more over all our laptops are PVC and BFR free.

HCL Infosystems Chemical Policy based on PrecautionaryPrinciple:

HCL Infosystems' vision is to avoid the use of substances in itsproducts that could seriously harm the environment or humanhealth and to ensure that the company acts responsibly andwith caution.

HCL Infosystems believes that if reasonable scientific groundsindicate a substance (or group of substances) could posesignificant environmental or human health risks, even if thefull extent of harm has not yet been definitively established,precautionary measures should be taken to avoid use of thesubstance(s) in products unless there is convincing evidencethat the risks are small and are outweighed by the benefits.HCL Infosystems considers these to be substances of concernthat need to be eliminated in the long term and substituted orgradually phased out in the short term.

HCL Infosystems is strongly in favour of government legislationsuch as the Electronic Products Standard law which restricts/bans use of certain identified chemicals in Electronic Products.

HCL Infosystems identifies these substances with considerationfor legal requirements as mandated by the Ministry ofEnvironment and Forest, Government of India, internationaltreaties and conventions, RoHS legislation etc. as applicable toits area of operations and by the following criteria:

a. Substances with hazardous properties that are a knownthreat to human health or the environment

b. Substances with hazardous properties that show strongindications of significant risks to human health or theenvironment

c. Substances with hazardous properties that are known tobio persists and bio accumulates in humans or theenvironment

To enforce the company's precautionary measures, HCLInfosystems strives to eliminate such substances of concern inits products by:

a. Maintaining a Banned and Restricted Substance List

b. Choosing designs and materials that avoid the use ofsubstances of concern

c. Committing suppliers not to use these substancescontractually

d. Substitution of viable alternate substances.

HCL Infosystems' methodology for Identifying HarmfulChemicals in Future:

At HCL Infosystems, we have a dedicated team that regularlymonitors the following indicators for identifying clues/proofsabout new Harmful Chemicals in Electronic Industry:

1. National Legislations

2. International Legislations

3. Concerns raised by International Community

4. Environment related Publications

5. Scientific Studies on the effects of Chemicals onEnvironment/human-health

6. Concerns raised by NGOs

7. Concerns raised by Study-groups

Product packaging material restriction

HCL Infosystems' objective is to use packaging materials in away which has minimum impact on environment. During theproduct development stage, product packaging is designedkeeping in mind the following points:

a. Use of only recyclable material

b. Use of minimum possible size & weight in order to reducematerial consumption

c. Use of recycled material wherever possible

d. Specifying the list of banned and restricted chemicals forpackaging materials

HCL is committed to re-use maximum material from the wastematerial. We believe in recycling 100% of our waste generation.All the e-waste generated is recycled and further from recyclingplant the glass and plastic is supplied to respectivemanufacturers as their raw material.

HCL Infosystems on compliance to RoHS under EU Directive(2002/95/EC)

Restriction of Hazardous Substances or RoHS is an importantEU legislation intended to eliminate or severely curtail the useof six hazardous elements namely Lead, Cadmium, HexavalentChromium, Mercury, Poly Brominated Biphenyl (PBB) and PolyBrominated Diphenyl Ether (PBDE).

The presences of these elements in products are detrimentalto the environment, health and safety of users and must bediscontinued or reduced to acceptable safe levels. Althoughthere are no direct compliance requirements on RoHS, HCLInfosystems has adopted a proactive stance on RoHS

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compliance keeping in mind the emerging requirements of thestakeholders.

With effect from 1st January, 2008 we have achieved total RoHScompliance for Desktops, Laptops, workstations, and Servers.

Information provided along with the product

All the products carry the adequate information on customerhealth and safety. HCL also mentions the hazardousconstituents present in the product in the information booklet.The process for disposal of Waste of Electrical & ElectronicEquipment (WEEE) and where to dispose WEEE is mentionedin the information booklet. The symbol of crossed out wheeledbin placed on the product indicates that the product shouldnot be placed in municipal waste. The details on collection ofe-waste and how to dispose old equipment is mentioned indetail on the website.

Electronic Waste Management

Waste of Electrical & Electronic Equipment has been a subjectof concern globally and nationally. HCL Infosystems believesthat the producers of electronic goods are responsible forfacilitating an environmental friendly disposal, once theproduct has reached the end of its life.

Recognizing the need to minimize the hazardous impact ofe-waste on the environment, HCL Infosystems Limited as thecountry's premier information enabling and integrationcompany has formulated a comprehensive programme for therecovery and recycling of WEEE in an environmentally safemanner.

Key Objectives:

The key objective of HCL's 'E-Waste Policy' aims at providingefficient and easy product recovery options to its consumersto facilitate responsible product retirement of all itsmanufactured EEE products. The key objectives of the policyinclude:

Product design:

We have taken appropriate care in, designing and productionof products that facilitate dismantling and recovery/reuse.

Separate collection/Recovery:

HCL extends the recycling facility to its users regardless of thefact, when and where they purchased the product. HCL assuresto all its customers that the entire process of recycling/disposalof WEEE will be carried out by an authorized recycling agency.

To improve the efficiency of the WEEE recycling system HCLhas adopted the following options:

a. Increasing the number of collection points in co-ordination with the recyclers.

b. Help-desk for answering queries related to WEEE.

c. Increasing customer awareness on E-Waste recycling andparticipation of our valued customers through take-backschemes for old computers.

Green Bag Campaign

HCL launched its Green Bag Campaign under which we collectold equipments from HCL customers across India. We are alsoreaching out to all our customers and spreading awarenessabout proper recycling of electronic waste.

a. In all the products shipped, HCL includes the e-wasterelated FAQs and contact details of all its e-waste collectioncentres.

b. In all its user meets, HCL shares the e-waste managementdetails with its customers.

c. Apart from corporate customers, HCL has extended its e-waste collection program to retail customers through itsHCL Touch spread points spread across the country.

We have been seeing a continuous improvement in e-wastecollection since last five years. Last year we have collected closeto 65tons of e-waste which is almost 40 % more than what wecollected in the year 2010-2011.

Energy Management

Energy is one field where we have made a considerableimprovement. We divide our Energy efforts in 2 broadcategories:

1. Energy Efficient Products

2. Energy Efficient Operations

HCL Infosystems Support for mandatory Reduction of GHGEmissions:

Primary to HCL's strategy to reduce the environmental impactof its operations is its commitment to improve energy efficiencyand reduce carbon footprint. HCL has commenced workingtowards accomplishing this commitment. In order to conformto the requirements of international reporting, more robustdata and management systems will be developed by HCL asdelineated in the various protocols and accepted standards.

HCL will report its GHG emissions based on:

a) The guidelines provided by "The Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard", revisededition, 2004.

b) "Sustainability Reporting Guidelines: G3", published byGlobal Reporting Initiative (GRI), 2006 and

c) Relevant provisions of ISO 14064 on "Greenhouse GasQuantification, Reporting and Verification" - Greenhousegases - Part 1: Specification for the quantification,monitoring and reporting of organization emissions andremovals.

GHG emissions under Scope 1 and Scope 2 will be reported byHCL containing:

a) Scope 1: Production of electricity, heat, or steam, physicalor chemical processing / manufacture

b) Scope 2: GHG emissions from imports of electricity, heat,or steam

2007 was a crucial year for HCL, when we startedcalculating our GHG emissions from financial year 2007-08. To start with, we started collecting data for our GHGemissions for locations of HCL Infosystems whichcontained all kinds of locations spread across the country.

Among all the last 4 years, in 2007-08 we had a growthacceleration resulting in a higher carbon footprint. Thereforewe decided to adopt 2007-08 as the base year for our GreenHouse Gas footprint calculation and disclosure.

We have been publishing our internally audited figures onscope 1 and scope 2 emissions since then. In 2007-08, HCL'soverall emissions were 15587.44 tonnes of CO2 equivalent. And

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thereafter we have reduced it to 13.4% till last year 2010-2011at 13,507 tonnes of CO2 equivalent. We are confident that wewill surpass our target of 20% reducing by the year 2014 frombase year 2007.

Energy Saving

HCL always work towards making products which consumesless energy. The results of various steps taken to reduce theelectricity consumption are there to see for everyone in our

GHG Emission report. We have continuously managed toreduce the GHG consumption year on year from last 4 years.All our laptops are BEE star compliant and our desktops areEnergy star compliant.

HCL is evaluating options on how to use more andmore renewable source of energy. HCL Green Data Centreat HO, Noida became the first Data Centre Building in India tobe certified LEED IC PLATINUM by US-Green BuildingCouncil.

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Directors' ReportTo the Members,

Your Directors have pleasure in presenting their Twenty Sixth Annual Report together with the Audited Accounts for the financialyear ended 30th June, 2012.

Financial Highlights` in Crores

Particulars Consolidated Standalone2011-12 2010-11 2011-12 2010-11

Net Sales and other income 10896.56 11510.60 10392.56 11014.29Profit before Interest, Depreciation and Tax 215.07 347.18 184.75 344.27Finance Charges 84.62 79.38 80.09 73.97Depreciation and Amortisation 46.06 38.36 43.12 33.20Profit before Tax 84.39 229.44 61.54 237.10Provision for Taxation: Current 20.32 66.19 19.61 65.94

For earlier years - 1.79 - 1.79Deferred (5.93) (7.87) (5.93) (7.86)

Net Profit after Tax (Before Minority interest) 70.00 169.33 47.86 177.23Minority interest (2.07) 1.14 - -Net Profit after Tax (After Minority interest) 72.07 168.19 47.86 177.23Profit available for appropriation 816.89 971.95 831.28 1010.55AppropriationsDebenture Redemption Reserve (12.00) 4.00 (12.00) 4.00Interim Dividend 66.88 131.72 66.88 131.72Proposed Dividend - 44.58 - 44.58Tax on Dividend (including Interim Dividend) 10.86 29.11 10.86 29.11Transfer to General Reserve 4.79 17.72 4.79 17.72Balance of Profit carried forward to next year 746.37 744.82 760.75 783.42

Performance

The consolidated net revenue of the Company was ` 10896.56Crores as against `11510.60 Crores in the previous year. Theconsolidated profit before tax was ` 84.39 Crores as against` 229.44 Crores in the previous year.

Your Directors recommend Nil final dividend. During the year,three interim (quarterly) dividends aggregating to ` 3/- pershare (150%) were paid.

Operations

A review of operations of the businesses of your Company forthe year ended 30th June, 2012 is provided in the ManagementDiscussion and Analysis Report forming part of the AnnualReport.

Acquisition

During the year, the Company on June 29, 2012 has acquiredcontent for the K-12 education segment from Attano Mediaand Education Private Limited at a negotiated consideration.

Reorganization of business

Subsequent to the year end, the Shareholders of the Companyby way of postal ballot have given their approval under section293(1)(a) of the Companies Act, 1956 for transfer of theCompany's Computing Products Manufacturing and ChannelBusiness as a going concern on slump sale basis, effective onsuch date as the Board deems fit for the Company, to a whollyowned subsidiary/group/affiliate/other entity either at bookvalue or for such lump sum consideration being not less thanthe book value.

Issue of Shares

During the year under review, no equity shares were allottedunder Employee Stock Option Scheme 2000.

Redemption of Non-Convertible Debentures

Exercising its Call option, the Company has on 19th December,2011 repaid the Non-Convertible Debentures (NCDs) allottedto Life Insurance Corporation of India Limited amounting to` 80 Crores and the interest due thereon.

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Awards & Recognition

The year that went by witnessed numerous recognitions foryour Company as we bagged several awards and accolades asunder:

1) Bagged Skoch Digital Inclusion Award in "Technology inService Delivery" category for successful implementationof Kolhapur Municipal Corporation E-Governance project.

2) Ranked No. 1 in IT Services Customer Survey by theprestigious DQ CMR CSA Award.

3) Bagged VARIndia 2011 award for Best Projector DLP(Infocus), Best PC Indian Brand and No.1 Distributor.

4) Voted by the channel Partners as the "Most TrustedCompany" in System Integration Category at the 10thVARIndia IT Forum 2012.

5) Received CMMI ML5 SCAMPI Class A Certification fromSoftware Engineering Institute (SEI), Carnegie Mellon forJaipur Development Center.

6) Ranked No. 1 Employer of the Year by DQ-CMR BestEmployer Survey 2011.

7) Bagged DDI's "Grow your Own Leaders Award" for overallmanagement culture & effectiveness of the organization'stalent management system.

8) Regained the second spot for the Greenest companies asper the Greenpeace Survey - Guide to Greener Electronics,November 2011. The Company scored well for its GHGemission levels from its entire operations, energy efficientproducts, hazardous substance free products andsustainable operations.

9) Won an award in the large scale category at the FICCIQuality System Excellence Awards 2011 for Puducherryplant.

10) HCL Learning bagged the following awards:

• Bloomberg|UTV B-School Excellence award forInstitute Management Systems (IMS) in the categoryof "Best Cloud Based Education Institute ManagementSystem".

• Star News National Education Award for Digischoolin the category of "Best ICT Enabled Content for K12Education".

• Star News National Education Award for Digicampusin the category of "Best Technology BASED Solutionsfor Higher Education Institutes".

• The prestigious Jury Award at the 7th eINDIA awardsin the category of Best Open and Distance LearningPractices in Higher education for Xcelerate program.

• Best Innovative Live Two Way Learning Solution forTest Preparation - Xcelerate and Most PreferredLearning Solutions Partner for Schools - Digischoolat the World Education Congress.

Employee Stock Option Plan

Employee Stock Option Scheme 2000

Pursuant to the approval of the Shareholders at an Extra-Ordinary General Meeting held on 25th February, 2000 for grantof options to the employees of the Company and itssubsidiaries (the ESOP 2000), the Board of Directors hadapproved the grant of 30,18,000 options including the optionsthat had lapsed out of each grant. Each option confers on theemployee a right for five equity shares of ` 2/- each.

Employee Stock Based Compensation Plan 2005

The Shareholders of the Company have approved theEmployee Stock Based Compensation Plan 2005 through aPostal Ballot for grant of 33,35,487 options to the employeesof the Company and its subsidiaries. The Board of Directors hasgranted 31,96,840 options including the options that hadlapsed out of each grant. Each option confers on the employeea right for five equity shares of ` 2/- each at the market price asspecified in the SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999, on thedate of grant.

Credit Ratings

The credit rating by ICRA continued at 'A1+' rating indicatinghighest safety to the Company's Commercial Paper programof ` 500 Crores.

The long term rating assigned by Fitch to the Companycontinued at 'AA- (ind)'. The long term rating by Fitch alsocontinued at 'AA- (ind)' for Non-Convertible Debentureprogramme of ` 80 Crores.

Fixed Deposits

There were no fixed deposits outstanding either at thebeginning or at the end of the year.

Listing

The equity shares of the Company are listed at The BombayStock Exchange Limited, Mumbai (BSE) and National StockExchange of India Limited, Mumbai (NSE).

The Company has paid the listing fee for the year 2012-2013 toBSE and NSE.

Directors

After a long association with HCL of over 35 years, Mr. AjaiChowdhry stepped down from the position of Director of theCompany w.e.f. 30th June, 2012. Mr. Chowdhry had earlierstepped down from the position of Whole-time Director of theCompany w.e.f 31st March, 2012. Mr. Chowdhry was one of the6 co-founders of HCL and took over as the CEO of your companyin 1994. In his long inning as the CEO (1994-2010), he steeredthe aggressive growth of the Company. During his tenure asthe CEO, the company grew its sales from ` 600 crores (year1994-95) to ̀ 11,000 crores (year 2010-11). Besides contributingto the growth of the Company, Mr. Chowdhry contributed tothe growth of Indian IT hardware industry as a whole and hasbeen a member of many Industry-Government task forces setup for the growth of the industry. He was the chairman, CIINational Defence Council and was also the Co-Chairman of IT

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task force set up by the Ministry of IT & Communications,Government of India amongst many other leading positionsin several government committees on IT, Electronics andHardware. In recognition of his contribution to the Indian ITindustry he received many recognitions and awards. In 2011,the honourable President of India conferred upon him theprestigious Padma Bhushan. Some of the other awardsbestowed upon him included the CNBC Asia Business Award2010 for the Viewers Choice category, India Innovator of theYear Award by the then Honorable Finance Minister, Mr PranabMukherjee at the 6th edition of the CNBC TV18 India BusinessLeader Awards 2010 and DATAQUEST 'IT Person of the Year2007' Award. The Board places on record its appreciation forthe contributions made by him during his tenure with theCompany.

Mr. Harsh Chitale and Mr. Pradeep K. Khosla were appointed asAdditional Directors of the Company with effect from 17th

August, 2011 and were appointed as Directors by theShareholders at the Annual General Meeting of the Companyon 4th November, 2011. Mr. Chitale was also appointed asWhole-time Director of the Company with effect from17th August, 2011.

Mr. Dhirendra Singh has been appointed as an AdditionalDirector on Board of the Company with effect from 31st January,2012. The Company has received notice from member(s) of theCompany, under section 257 of the Companies Act, 1956,proposing his appointment as Director of the Company, alongwith the requisite deposit.

In accordance with the Articles of Association of the Company,Mr. V.N. Koura, Ms. Anita Ramachandran and Dr. Nikhil Sinha,Directors, retire by rotation and being eligible, offer themselvesfor re-appointment.

Corporate Governance Report and Management Discussionand Analysis Statement

The Corporate Governance Report and the ManagementDiscussion and Analysis Statement are attached and are to beread with the Directors' Report.

Insider Trading Regulations

As per the requirements under the SEBI (Prohibition of InsiderTrading) Regulations, 1992, as amended from time to time, the'Code of Conduct for prevention of Insider Trading' and the'Code of corporate disclosures practices for prevention ofInsider Trading' are in force.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of theCompanies Act, 1956, and based on the representationsreceived from the operating management, the Directors herebyconfirm that:

a. in the preparation of the annual accounts, the applicableaccounting standards have been followed and there hasbeen no material departure;

b. appropriate accounting policies have been selected andapplied consistently, and that the judgments andestimates made are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company

as at 30th June, 2012 and of the profit of the Company forthe said period;

c. proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a goingconcern basis.

Auditors & Auditors’ Report

M/s Price Waterhouse, Chartered Accountants, who are thestatutory auditors of the Company hold office, in accordancewith the provisions of the Companies Act, 1956, upto theconclusion of the forthcoming Annual General Meeting andare eligible for re-appointment. The proposed re-appointment,if made will be in accordance with the limits prescribed underSection 224(1B) of the Companies Act, 1956.

Personnel

Industrial Relations during the year under review continued tobe peaceful and cordial. No man-days were lost due to industrialdisputes. Your Company was ranked No. 1 in the Best EmployerSurvey conducted by IDC-Dataquest and ranked amongst Topfifty in the Best Companies to Work For 2011 conducted byEconomic Times and Great Place to Work Institute.

The information as required to be provided in terms of section217(2A) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 has been set out in theannexure to the Directors' report. However, in terms of theprovisions of section 219(1)(b)(iv) of the said Act, the AnnualReport is being sent to the members of the Company excludingthe said information. Any member interested in obtaining thesaid information may write to the Company Secretary at theregistered office of the Company.

Additional information relating to Conservation of Energy,Technology Absorption and Foreign Exchange Earnings andOutgo

The additional information required in accordance with sub-section (1)(e) of Section 217 of the Companies Act, 1956, readwith the Company (Disclosure of Particulars in the Report ofthe Board of Directors) Rules,1988, is appended to and formspart of this report.

Particulars of subsidiaries/associates/JVs

The following developments took place in the subsidiaries/associates/JVs of the Company:

(a) HCL Infosystems MEA FZCO, Dubai (HCL MEA)

The Company through its wholly owned subsidiary, HCLInsys Pte. Limited, Singapore has on August 7, 2012acquired the remaining 40% equity stake w.e.f January1, 2012 in HCL MEA. Consequently, HCL MEA w.e.f January1, 2012, has become a wholly owned subsidiary of HCLInsys Pte. Limited, Singapore.

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(b) HCL Computing Products Limited (HCPL)

Incorporated as a wholly owned subsidiary on 12th July,2012. The Computing Products Manufacturing andChannel Business of the Company will be transferred toHCPL.

(c) Techmart Telecom Distribution FZCO, Dubai (Techmart)

Techmart, Dubai, in which a subsidiary of the Companyhas 20% stake, is being dissolved.

(d) HCL Infinet Limited

The Company has on 10th November, 2011 concluded thesale of entire equity stake in HCL Infinet Limited, a whollyowned subsidiary to M/s Tikona Digital Networks Limited.Consequently, HCL Infinet Limited has ceased to besubsidiary of the Company.

(e) HCL Touch Inc., US

Incorporated as a wholly owned subsidiary on 29th August,2011, to carry on HCL Touch Global Support Centre andhandle the transaction of US based customers throughinternet marketing and channel partnership.

(f ) Pimpri Chinchwad eServices Limited

In terms of a Joint Venture agreement and on transfer of15% equity stake to IL&FS Environmental Infrastructureand Services Limited, the subsidiary of InfrastructureLeasing and Financial Services Limited (IL&FS), theCompany has been converted into a Joint Venture withIL&FS w.e.f. 29th August, 2011.

(g) Digilife Distribution and Marketing Services Limited

The name of HCL Security Limited, the wholly ownedsubsidiary, was changed to Digilife Distribution andMarketing Services Limited (Digilife) with effect from 26th

July, 2011. Digilife is engaged in Digital Entertainmentbusiness with effect from 1st August, 2011.

In terms of the exemption granted by Ministry of CorporateAffairs (MCA) vide General Circular No. 2/2011 dated8th February, 2011, the accounts of the following subsidiarieshave not been enclosed with the results:

- Digilife Distribution and Marketing Services Limited(formerly known as HCL Security Limited);

- HCL Infocom Limited;

- RMA Software Park Private Limited;

- Pimpri Chinchwad eServices Limited;

- HCL Insys Pte Limited, Singapore;

- HCL Investments Pte Limited, Singapore;

- HCL Infosystems MEA FZCO, Dubai;

- HCL Infosystems LLC, Dubai;

- HCL Infosystems MEA LLC, Abu Dhabi;

- HCL Infosystems Qatar WLL, Qatar;

- HCL Infosystems South Africa Pty Limited, South Africa;and

- HCL Touch Inc, US

The annual accounts of these subsidiaries are available forinspection on any working day at the Registered Office of theCompany. The Company shall also furnish a hard copy of detailsof accounts of these subsidiaries to any Shareholder ondemand. These accounts are also available on the website ofthe Company at www.hclinfosystems.com. A summary offinancials of the subsidiaries has been included in the AnnualReport. The Consolidated Financial Statements presented bythe Company include the financial results of its subsidiarycompanies.

Acknowledgement

The Directors wish to place on record their appreciation for thecontinued co-operation the Company received from variousdepartments of the Central and State Government, Bankers,Financial Institutions, Dealers and Suppliers and alsoacknowledge the contribution made by the Employees.

The Board also wishes to place on record its gratitude to thevalued Customers, Members and Investing Public for thecontinued support and confidence reposed in the Company.

On behalf of the Board of Directors

Sd/- Sd/-

E.A. Kshirsagar Harsh Chitale(Director) (Chief Executive Officer

and Whole-time Director)

Date : 24th August, 2012

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Annexure To Directors' ReportInformation relating to Conservation of Energy, R&D,Technology Absorption and Innovation, and ForeignExchange Earnings/Outgo forming part of the Directors'Report in terms of section 217(1)(e) of the Companies act,1956

A. Conservation of Energy

Under HCL ecoSafe policy, energy conservation has beena key area of focus with emphasis on reducing powerconsumption in products and on employing measures inmanufacturing of products that minimize energyconsumption.

All our manufacturing facilities practice various measuresto reduce power consumption by using natural lightduring daytime and have different capacity DG sets thatconsume optimum amount of diesel as per required load.

Some of the ecoSafe initiatives carried out at our factoriesinclude:

1. Scheduled running hours with automatic timercontrol for water pumping from underground borewell to sump to reduce water consumption inPondicherry Manufacturing Unit.

2. All FRP (Transparent sheets) were replaced withPolycarbonate sheets (at rooftop) to increase thenatural illumination level.

3. Power shutdown after normal working hours wasimplemented daily in all areas including productionarea at Pondicherry Manufacturing Unit.

4. Recycled water from STP was used for all gardeningpurposes as part of water conservation in Pondicherry& Uttaranchal Manufacturing Units.

5. Replaced CRT monitors with TFT monitors; resultingin power saving of 8400 units in a year in UttaranchalManufacturing Unit.

6. Improved the efficiency of ACs by increasing theinsulation to minimize the cooling loss in UttaranchalManufacturing Unit.

7. Rescheduled water pump, RO & STP operation andRT of machines in non-peak hrs (Night) in UttaranchalManufacturing Unit.

8. Sharing fans to reduce power consumption inUttaranchal Manufacturing Unit.

Eco-safe Program

Under the sustainable business initiative programundertaken by HCL, HCL Labs have worked on productsthat are environmental friendly. Your company's personalcomputing products are ROHS compliant & build intechnology reduces the power footprint and are energyefficient.

Your Company regained the second spot for the Greenestcompanies as per the Greenpeace Survey - Guide toGreener Electronics, November 2011. The company scoredwell for its GHG emission levels from its entire operations,energy efficient products, hazardous substance freeproducts and sustainable operations.

Energy Efficient Data Center

HCL Infosystems now has LEED (Leadership in Energy andEnvironment Design) certified Data Center (from U.S.Green Building Council). HCLI has the highest certificationlevel i.e. PLATINUM certification.

B. Research and Development

1. Product Innovation & Engineering

R&D's vision is to value add to the company'scustomer base through innovations in offerings andprocesses. Your Company's R&D also called "HCL Labs"have been setup with the mission to develop HCL IPthat gives our businesses a competitive edge in theirrespective markets, enabling them to acquire newcustomers & increase customer stickiness in anincreasingly competitive world.

The identification & selection of products taken upfor development is done through the Concept toCommercialization (C2C) process driven by Marketing& R&D. The process captures customer need, thebusiness potential & HCL's ability to successfullydevelop/source a product and take it to market.

Beginning with a seed team of 80+ engineers, HCLLabs today is a strong team of 250 with five centersspread across Jaipur, Noida, Chennai & Pondicherry.During the last year, R&D has brought aboutstandardization of design & development processesacross its centers. R&D Jaipur center has achievedCMMiL5 maturity & certification. HCL Labs have beenrecognized by Department of Scientific & IndustrialResearch. This registration enables HCL Labs toparticipate in Government initiated R&D programs ofnational strategic interests.

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Fig. 1.1 HCL C2C Process

2. Benefit derived as a result of R & D

Major offerings developed / enhanced as a result of R&Dduring FY 11-12 include:

a. BancMate-Financial Inclusion - Your Company hasworked closely with stake holders in developing anend to end stack consisting of smart card, HHT, FIswitch & CBS which enables a business correspondentin the field to carry out an online or offline transactionsynced with Core Banking System (CBS) of the Banks.

b. Banc Scan - It is an end to end Business Intelligencesolution framework for the banking verticaldeveloped by HCL Labs. It includes data extraction,integration to delivering actionable, collaborative andweb based dashboard to multiple business of a bank.

c. HCL User Interface (UI) for Tablet -The UIcomponents in the Tablet developed by HCL includesandroid launcher, widgets, boot animation sequence,live wallpapers, Themes which offers the customersan intuitive & encouraging interface. This HCL UIdefines the personalities of the successfully launchedHCL Tablet series - the X1 and Y1.

d. PC Projector- HCL Labs have developed Duolo, a PCcum Projector unit for use in schools and colleges.

e. Tefilla Network Management Software (NMS):Tefilla NMS is a network management tool developedto address the needs of an enterprise CIO. Serviceoriented architecture based, it has the flexibility to add& customize modules to cater to the new elements &incorporate customer specific business logicrequirements. Its features make it highly adaptableto the customers. It is offered on Cloud as Software asa Service (SaaS) addressing the emerging new modelsof service delivery.

f. Customer Self Service Terminal - Among theproducts released under this category this year, yourCompany has developed the Automatic TicketVending Solution for unreserved ticketing service for

Indian railways. These series of products cater to theemerging self service terminal market in our country.

3. Expenditure on R & D

(`/Crores)

Capital : 6.57Revenue : 3.73Total : 10.30

4. Technology Absorption, Adaptation and Innovation

India is a nation with aspiring young population. It is avast country both in terms of geographical spread &diversity requiring localized solutions & services. Thisoffers immense opportunities for innovation & yourcompany with over three decades of experience; iscreating products for India from India with a mission tobuild affordable localized solutions.

Five R & D centers of HCL Labs have leveraged the latest intechnology, customizing the same to meet the needs ofcustomers here in India. Your company has developed anend to end framework for delivery of affordable financialinclusion services with web 2.0 digital learning deliveryframework.

The year saw your company develop capability in the fieldof UI development for digital lifestyle devices, mobileapplication on android, IOS platforms, SOA architectureof products and development of framework that enablessoftware products on cloud as SaaS.

5. Foreign Exchange Earnings and Outgo

This year your company witnessed multifarious majorachievements ranging from strengthening its footprintsglobally to winning varied projects of prestige.

• Your Company bagged a very prestigious long termcontract from Infocomm Development Authority(IDA),Singapore for providing Facility ManagementServices to various Government agencies & Ministriesand statutory bodies in Singapore. The initial phaseof the contract includes providing Managed Servicesto Singapore Parliament, Peoples Association,Ministry of National Development, WorkforceDevelopment Authority, Ministry of Cultural Youth &Sports Affairs and Singapore Sports Council. Ourcompany has also been awarded the Bulk contract tocontest and bid for the balance 105 governmentagencies in Singapore.

• Your Company increased footprints in African &SAARC nations by establishing partner networkthrough renowned ICT organizations in respectiveregions. We established dedicated help line forsupport of HCL products in Sri Lanka andcomputerized over 400+ schools in Eastern Provinceof Sri Lanka.

• Your Company bagged repeated orders for furtherstrengthening its PAN Africa presence.

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• Your Company was appointed as a strategic partnerto the Government of Ghana (Ministry of ICT) for itsvarious ICT initiatives.

• Your Company strengthened internationally byestablishing office in Dubai in 2010 and broadenedour aggressive expansion plans in the Middle East byestablishing an office in Qatar in March 2012.

• Your Company bagged a prestigious order fromMashraf Al Rayan, Qatar in addition to its existingmajor clientele like Qatar International Islamic Bank,Doha Bank & Qatar Islamic Bank among others.

• Your Company announced a strategic partnershipwith Consolidated Gulf Co. (GCG) and BDL Gulf FZCOin Dubai to make available HCL Laptops, Desktops andTablets in Qatar.

• Your Company bagged various projects fromprestigious clients this year. We provided products,services and solutions to organizations like NITIDistributors Ltd., Union National Bank, RAK Ceramics,DP World among others.

• Your Company signed major deals and repeat orderswith Ministry of Education, GEMS Education, EmiratesAirlines and Fly Dubai.

• Your Company acquired Security projects for variousbanks like HSBC, Abu Dhabi Islamic Bank, Citibank,Rak Bank, Emirates NBD and Mashreq Bank.

During the period under review, the Company's earningsin foreign currency were ` 71.15 Crores (Previous Year` 80.67 Crores). The expenditure in foreign currencyincluding imports during the year amounted to ` 1627.13Crores (Previous year ` 1983.63 Crores).

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The details of the options granted under the HCL Infosystems Limited, Employee Stock Option Scheme 2000 (Scheme2000) and Employee Stock Based Compensation Plan 2005 (Scheme 2005) as on 30th June, 2012 are given below:-

Employee Stock Option Scheme 2000 (Scheme 2000)

Options Granted : 30,18,000 which confer a right to get 1 equity share of `10/- each (each equity share of the face value of`10/- has been sub divided into five equity shares of ` 2/- each).

Pricing Formula : The members of the Company at the Extra Ordinary General Meeting held on 25th February, 2000 approvedthe exercise price as the price which will be not less than 85% of the fair market value of the shares on thedate on which the Board of Directors of the Company approved the Grant of such options to the employeesor such price as the Board of Directors may determine in accordance with the regulations and guidelinesprescribed by the Securities and Exchange Board of India (SEBI). The members of the Company at theAnnual General Meting held on 21st October, 2004, approved the amendment to the pricing formula thatthe options granted but not yet exercised by the employees or options that would be granted in future,would be at the market price on the date of grant. For this purpose the market price as specified in theamended provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999 and the regulations/guidelines prescribed by SEBI or any relevant authority, from timeto time to the extent applicable.

Variance of The pricing formula has been amended that the options granted but not yet exercised by the employeesterms of options : or options that would be granted in future, would be at the market price. For this purpose, the market

price means the market price as specified in the amended provisions of SEBI (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the regulations/guidelines prescribedby SEBI or any relevant authority, from time to time to the extent applicable.

Options Details : Date of Grant Options Options Options Lapsed/ Options inGrant Price (`) Vested till Exercised till Forfeited during force as on

30/06/2012 30/06/2012 Y. E. 30/06/2012 30/06/201210-Aug-00 289.00 Fully vested 1363708 - -28-Jan-04 538.15 Fully vested 844093 13603 11536225-Aug-04 603.95 Fully vested 57892 13735 2324918-Jan-05 809.85 Fully vested 39977 48424 7300415-Feb-05 809.30 Fully vested 2400 - -15-Mar-05 834.40 Fully vested 3794 7435 1082815-Apr-05 789.85 Fully vested 960 2452 88014-May-05 770.15 Fully vested 970 2475 118015-Jun-05 756.15 Fully vested 3565 - 67515-Jul-05 978.75 Fully vested 1318 9584 89613-Aug-05 1144.00 Fully vested - 5929 1010115-Sep-05 1271.25 Fully vested - 3862 527815-Mar-07 648.75 Fully vested 7300 - 13670023-Jan-08 898.25 Fully vested - 10995 4140018-Aug-09 627.25 12000 - - 1200026-Oct-10 586.75 24000 - - 240002-Feb-11 516.50 3600 - - 360030-Jan-12 233.25 - - - -18-Jun-12 202.00 - - - -

Total 2325977 118494 459153

Vesting Details : 30%- 12 months after the grant date30%- 24 months after the grant date40%- 42 months after the grant date

Employee Stock Based Compensation Plan 2005 (Scheme 2005)

Options Granted : 31,96,840 which confer a right to get 5 equity shares of ` 2/- each.

Pricing Formula : As per the resolution passed by members of the Company, through postal ballot, the result whereof wasdeclared on 13th June, 2005, the options are granted at the market price on the date of grant or such priceas the Board of Directors may determine in accordance with the Regulations and Guidelines prescribed

INFORMATION REGARDING EMPLOYEE STOCK OPTION SCHEME

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by SEBI or other relevant authority from time to time. For this purpose, the market price as specified in theamended provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999 and the regulations/guidelines prescribed by SEBI or any relevant authority from timeto time to the extent applicable.

Variance of terms : No variation made.of options

Options Details : Date of Grant Options Options Options Lapsed/ Options inGrant Price (`) Vested till Exercised till Forfeited during force as on

30/06/2012 30/06/2012 Y. E. 30/06/2012 30/06/201213-Aug-05 1144.00 Fully vested 9074 495540 124261019-Oct-05 1157.50 Fully vested - 9660 2560015-Nov-05 1267.75 Fully vested - 4160 1184015-Dec-05 1348.25 Fully vested - 3740 696014-Jan-06 1300.00 Fully vested - 1876 686415-Feb-06 1308.00 Fully vested - 648 259216-Mar-06 1031.00 Fully vested - 4790 756017-Apr-06 868.75 Fully vested - 1580 232015-May-06 842.50 Fully vested - 1570 628015-Jun-06 620.50 Fully vested 430 2450 788017-Jul-06 673.75 Fully vested 80 3562 674015-Mar-07 648.75 Fully vested 7860 37060 30402023-Jan-08 898.25 136845 - 28500 9582016-Aug-11 375.00 - - - -17-Aug-11 375.00 - - - -18-Jun-12 202.00 - - - -

Total 17444 595136 1727086

Vesting Details : 20%- 12 months after the grant date20%- 24 months after the grant date20%- 36 months after the grant date20%- 48 months after the grant date20%- 60 months after the grant date

Other DetailsS. No. Description Scheme 2000 Scheme 20051. Total number of shares arising as a 1,16,29,885 equity shares 87,221 equity shares

result of exercise of options : of ` 2/- each. of ` 2/- each.2. Money realized by exercise of options : ` 93,10,34,384.15 ` 1,58,00,774.803. Weighted average exercise

price of options granted (`) : 445.59 1061.174. Weighted average fair value of options granted (`) : 121.23 143.325. Employee-wise details of options granted to :

(i) Senior Management :• Mr. Harsh Chitale 60000 -• Mr. J.V. Ramamurthy 45500 7500• Mr. Sandeep Kanwar 42000 7500• Mr. Rajendra Kumar 41000 7500• Mr. Hari Baskaran 31000 7500• Mr. George Paul 30000 7500• Mr. Rajeev Asija 30000 7500• Mr. Suman Ghose Hazra 18500 7500• Mr. Rothin Bhattacharya 20000 -• Mr. Anand Ekambaram 20000 -• Mr. Sanjay Kumar David 12000 -• Mr. Gautam Advani - 20000• Mr. Princy Bhatnagar - 10000• Mr. M. Chandrasekaran - 7000• Mr. Sayantan Nandi 10000 -• Mr. Rajeev Tupsakri 6000 -

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• Mr. Neeraj Jaitley 12000 -• Mr. Kaushik Mitra - 4000• Mr. A.P.S. Bedi 18000 6500• Mr. Vivek Punekar 14500 5500• Mr. Sushil Kumar Jain - 2500

(ii) Employees holding 5% or more of the totalnumber of options granted during the year :• Mr. Gautam Advani - 20000• Mr. Princy Bhatnagar - 10000• Mr. M. Chandrasekaran - 7000• Mr. Sayantan Nandi 10000 -• Mr. Rajeev Tupsakri 6000 -• Mr. Neeraj Jaitley 12000 -• Mr. Kaushik Mitra - 4000

(iii) Identified employees who were granted options during anyone year equal to or exceeding 1% of the issued capital(excluding outstanding warrants and conversions) of theCompany at the time of grant NIL NIL

The fair value of each stock option granted under Employee Stock Option Plan 2000 and Employee Stock Based CompensationPlan 2005, as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs aregiven as under:

Description Employ Stock Option Employee Stock BasedScheme 2000 Compensation Plan 2005

Volatility : 31% to 68% 31% to 65%Risk free rate : 4.57% to 8.24% 6.49% to 8.34%Exercise Price : ` 202.00 to ` 1271.25 ` 202.00 to ` 1348.25Time to Maturity (years) : 2.20 to 5.50 2.50 to 7.00Dividend Yield : 9% to 31% 10% to 36%Life of options : 8.5 Years 10 YearsFair Value of options asat the grant date : `1.29 to ` 203.14 `1.37 to `262.97

Notes:1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for

Government Securities.3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.4. Dividend Yield: Based on historical dividend payouts.

Where the Company has calculated the employee compensation cost using the intrinsic value of Stock Options, thedifference between the employee compensation cost that shall have been recognised if it had used the fair value ofOption

The Company has used intrinsic value method for calculating the employee compensation cost with respect to the Stocks Option.

The impact on the profit of the Company for the year ended 30th June, 2012 and the basic and diluted earnings per share hadthe Company followed the fair value method of accounting for stock options is set out below:

2012 2011` Crores ` Crores

Profit after tax as per Profit and Loss (a) 47.86 177.23Add : Employee Stock Compensation Expense as per Intrinsic Value Method - -Less : Employee Stock Compensation Expense as per Fair Value Method

(Net of amount attributable to employees of subsidiaries ` 0.00 Crores) 0.39 0.70Profit after tax recomputed for recognition of employee stockcompensation expense under fair value method (b)* 47.47 176.53Earning Per Share based on earnings as per (a) above: - Basic ` 2.15 ` 8.08 - Diluted ` 2.15 ` 8.08Earning Per Share had fair value method been employed foraccounting of employee stock options: - Basic ` 2.13 ` 8.05 - Diluted ` 2.13 ` 8.05* Excludes impact on tax expense of employee stock compensation expense.

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Auditors' CertificateBoard of DirectorsHCL Infosystems Limited806, Siddharth96, Nehru Place,New Delhi-110019

1. We have examined whether the accompanying Employee Stock Option Scheme 2000 (hereinafter referred to as the "2000Plan") and Employee Stock based Compensation Plan 2005 (hereinafter referred to as the "2005 Plan") of HCL InfosystemsLimited (hereinafter referred to as the "Company"), which we have initialed for identification purposes only, has beenimplemented by the Company in accordance with Securities and Exchange Board of India (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines, 1999, as amended (hereinafter referred to as the "Guidelines") and inaccordance with the special resolution passed by the shareholders of the Company in Extra Ordinary General Meeting onFebruary 25, 2000 approving the 2000 Plan and under Section 192A of the Companies Act,1956 approving the 2005 Plan onJune 13, 2005 (hereinafter referred to as the "Shareholders' Resolution") respectively, with reference to the books of accounts,records and other relevant documents maintained by the Company and produced for our examination.

2. Our examination was carried out in accordance with the Guidance Note on Audit Reports and Certificates for Special Purposesissued by the Institute of Chartered Accountants of India.

3. Based on our examination, as above, and according to the information and explanations given to us, we report that theCompany has implemented the Plan in accordance with the Guidelines and the Shareholders' Resolution.

4. This certificate has been prepared at the request of the Company pursuant to Clause 14.1 of the Guidelines solely to enablethe Board of Directors of the Company to place it before the shareholders at the ensuing Annual General Meeting of theCompany. It should not be used for any other purpose or by any person other than the addressees of this certificate. PriceWaterhouse neither accepts nor assumes any duty of care or liability for any other purpose or to any other party to whom itis shown or into whose hands it may come without our prior consent in writing.

For Price WaterhouseFirm Registration No. 301112EChartered Accountants

Abhishek RaraPlace : Noida PartnerDate : August 24, 2012 Membership No. 77779

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Report On Corporate Governance1. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE:

The Company firmly believes that good corporate governance practices ensure efficient conduct of the affairs of the Companywhile upholding the core values of transparency, integrity, honesty and accountability and help the Company in its goal tomaximize value for all its stakeholders.

The Company adopts and adheres to the best recognized corporate governance practices and continuously strives to better them.

The Company is in compliance with the requirements of the guidelines on corporate governance stipulated in Clause 49 ofthe Listing Agreement with the Stock Exchanges.

2. BOARD OF DIRECTORS:(i) As on 30th June, 2012, the Board of Directors of the Company comprises of ten Directors. Of the ten Directors, eight are

Non-executive Directors and six are Independent Directors. The composition of the Board is in conformity with Clause49 of the Listing Agreement entered into with the Stock Exchanges.

(ii) None of the Directors on the Board is a member of more than 10 Committees or Chairman of more than 5 Committeesas specified in Clause 49 across all the Companies in which he is a Director. Necessary disclosures regarding Committeeposition in other public companies as at 30th June, 2012 have been made by the Directors.

(iii) The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year andthe last Annual General Meeting and the number of Directorships and Committee Chairmanship/Memberships held bythem in other companies is given below. Other Directorships do not include alternate directorships, directorships ofprivate limited companies, companies incorporated outside India and companies incorporated under Section 25 of theCompanies Act, 1956. Chairmanship/Membership of Board Committees include only Audit and Shareholders/InvestorsGrievance Committees.

Names Category No. of Board Whether No. of No. of CommitteeMeetings during attended last Directorships in positions held

2011-12 AGM held on other public in public4th November, companies as companies as

2011 on 30th June 2012 on 30th June 2012

Held Attended Chairman MemberMr. Harsh Chitale* Executive 5 5 Yes 2 - 1(Whole-time Director Director& CEO)

Mr. Ajai Chowdhry** Promoter & Non- 5 5 Yes - - -(Chairman) executive DirectorMr. J. V. Ramamurthy Executive 5 5 Yes 3 - 1(Whole-time DirectorDirector & COO)Mr. D. S. Puri Promoter & Non- 5 5 No - 1 -

executive DirectorMr. E. A. Kshirsagar Independent & Non- 5 5 Yes 7 5 4

executive DirectorMs. Anita Independent & Non- 5 4 No 3 - 3Ramachandran executive DirectorMr. V. N. Koura Independent & Non- 5 4 No 3 1 -

executive DirectorDr. Nikhil Sinha Non-executive 5 5 Yes - - 1

DirectorMr. Ajay Vohra Independent & Non- 5 3 No 1 1 1

executive DirectorDr. Pradeep K. Khosla* Independent & Non- 5 3 No - - -

executive Director

Mr. Dhirendra Singh*** Independent & Non- 3 2 N.A. 3 - 1executive Director

* Mr. Harsh Chitale and Dr. Pradeep K. Khosla were appointed as Additional Directors w.e.f. 17th August, 2011. Mr. Chitale was also appointedas Whole-time Director w.e.f. 17th August, 2011.

** Mr. Ajay Chowdhry resigned from the position of Whole-time Director w.e.f. 31st March, 2012 and from the position of Director w.e.f. 30thJune, 2012.

*** Mr. Dhirendra Singh was appointed as an Additional Director w.e.f. 31st January, 2012.

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(iv) Five Board Meetings were held during the financial year 2011-12 and the gap between two meetings did not exceed fourmonths. The dates on which the Board Meetings were held are as follows:

17th August, 2011 3rd & 4th November, 2011 30th & 31st January, 201224th & 25th April, 2012 26th June, 2012

(v) Necessary information as mentioned in Annexure 1A to Clause 49 of the listing agreement has been placed before the Boardfor their consideration.Some of the items discussed at the Board meetings are listed below:• Annual operating plans, budgets and all updates.• Discussion on Economic Conditions & Business Outlook.• Discussion & review of Business Operations.• Capital budgets and all updates.• Advancing inter-corporate loan to subsidiaries.• Issue of corporate guarantees(s) in favour of subsidiaries.• Acquisition of properties, business and assets of other entity.• Incorporation of overseas subsidiary and investment therein.• Quarterly Results of the Company and its operating divisions or business segments.• Minutes of meetings of all Board Committees.• Minutes of meetings of Board of Directors of Subsidiary Companies.• Show Cause, Demand, Prosecution notices and penalty notices.• Foreign exchange exposures and steps taken by management to limit the risks of adverse exchange rate movement,

if material.• Review of operations of subsidiary companies.• Approval for re-organisation/restructure of business.• Review of related party transactions including transactions under Section 297 of the Companies Act, 1956.• Approval of remuneration paid to Executive and Non-executive Directors.• Review of statutory compliances.• Noting risk management procedures.• Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-

payment of dividend, delay in share transfer etc.• Approval/Noting of contribution for charitable purposes.

3. ACCOUNTS AND AUDIT COMMITTEE:

(i) The Accounts and Audit Committee of the Company was constituted in August' 1998 in line with the provisions ofClause 49 of the Listing Agreements with the Stock Exchanges read with Section 292A of the Companies Act, 1956.

(ii) The primary objective of the Committee is to monitor and effectively supervise the Company's financial reporting processwith a view to provide accurate, timely and proper disclosures and ensure the integrity and quality of financial reportingand internal controls.

(iii) The composition, powers, roles and the terms of reference of the Committee are in terms of the requirement of Section292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement. All the Committee members have reasonableknowledge of finance and accounting and two members possess financial and accounting expertise.

(iv) The Composition of the Accounts and Audit Committee and details of meetings attended by its members are givenbelow:

Name Category No. of MeetingsHeld Attended

Mr. E. A. Kshirsagar (Chairman) Independent & Non-executive 5 5Ms. Anita Ramachandran (Member) Independent & Non-executive 5 4Dr. Nikhil Sinha (Member) Non-executive 5 5Mr. Ajay Vohra (Member) Independent & Non-executive 5 4Mr. Dhirendra Singh (Member)* Independent & Non-executive - -

* Mr. Dhirendra Singh was appointed as Member of the Committee w.e.f. 30th

June, 2012.

(v) The Audit Committee met 5 times during the financial year 2011-12 on the following dates:

17th August, 2011 3rd November, 2011 6th December, 201130th & 31st January, 2012 25th April, 2012

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(vi) The previous Annual General Meeting of the Company was held on 4th

November, 2011 and it was attended by theChairman of the Committee.

(vii) The Company Secretary of the Company acts as Secretary to the Committee.

4. EMPLOYEES COMPENSATION AND EMPLOYEES SATISFACTION COMMITTEE :

(i) The Employees Compensation & Employees Satisfaction Committee was constituted in August 1998 to recommend/review remuneration of Executive Directors and other employees based on their performance and defined assessmentcriteria and other matters relating to employees.

(ii) The composition of the Employees Compensation & Employees Satisfaction Committee and the details of meetingsattended by its members are given below:

Name Category No. of MeetingsHeld Attended

Ms. Anita Ramachandran (Chairperson) Independent & Non-executive 5 4Mr. Ajai Chowdhry (Member)* Promoter & Non-executive 5 5Mr. D. S. Puri (Member) Promoter & Non-executive 5 5Mr. E. A. Kshirsagar (Member) Independent & Non-executive 5 5

* Mr. Ajai Chowdhry ceased to be director of the Company w.e.f. 30th

June, 2012.(iii) The Committee met 5 times during the financial year 2011-12 on the following dates:

17th

August, 2011 3rd

November, 2011 30th

January, 201225

th April, 2012 26

th June, 2012

(iv) Compensation policy for Non-executive Directors (NEDs):Within the ceiling of 1% of the net profits of the Company computed under the applicable provisions of the CompaniesAct, 1956 and after obtaining the approval of the shareholders, the Non-executive Directors (other than Promoter Director)are paid a commission, the amount whereof is determined based on the policy adopted by the Company laying downthe criteria relating to their positions on the Board and the various Board Committees. These Directors are also paidsitting fees at the rate of ` 20,000 for attending each meeting of the Board and Board Committees.

(v) Details of remuneration paid / payable to all the Directors for the period from 1st July, 2011 to 30

th June, 2012:

(`/Lacs)

Name Salary & Perquisites Performance Commission Sitting FeesAllowances Linked Bonus

Executive DirectorsMr. Harsh Chitale* 157.56 10.24 72.18 - -Mr. Ajai Chowdhry** 135.24 53.76 100.00 - -Mr. J. V. Ramamurthy 82.41 13.11 16.00 - -Non-executive DirectorsMr. D. S. Puri - - - - -Mr. E. A. Kshirsagar - - - 26.0 5.8Ms. Anita Ramachandran - - - 14.0 2.4Mr. V. N. Koura - - - 8.0 0.8Dr. Nikhil Sinha - - - 12.0 4.0Mr. Ajay Vohra - - - 10.0 1.4Dr. Pradeep K. Khosla - - - 8.0 0.6Mr. Dhirendra Singh - - - 4.0 0.4

* w.e.f. 17th

August, 2012** up to 31

st March, 2012

During the year Mr. Harsh Chitale, Mr. Ajai Chowdhry and Mr. J. V. Ramamurthy were paid Performance Linked Bonus of` 60 lacs, ` 125 lacs and ` 60 lacs respectively pertaining to the year 2010-11.

The above remuneration excludes reimbursement of expenses on actual to Directors for attending meetings of theBoard/Committees.

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(vi) Details of Stock Options issued to Directors:-

- Mr. J. V. Ramamurthy was granted 45,500 options under Employee Stock Option Plan 2000 and 7,500 options underEmployee Stock Based Compensation Plan 2005. As on 30th June, 2012, all options under both schemes have beenvested. Out of these, 28,700 options have been exercised under Employee Stock Option Plan 2000.

- Mr. Harsh Chitale was granted 60,000 options under Employee Stock Option Plan 2000. As on 30th June, 2012,18,000 options have been vested.

Each option confers a right to apply for 5 equity shares of ` 2/- each. For pricing formula, please refer to the'Information regarding Employee Stock Option Scheme' forming part of the Directors' Report.

(vii) Period of contract of Executive Director:

(a) Mr. Harsh Chitale, Whole-time Director : 5 Years from 17th

August, 2011

- The contract may be terminated by either party giving the other party three months notice or the Companypaying three months salary in lieu thereof.

- There is no separate provision for payment of Severance Fees.

(b) Mr. J. V. Ramamurthy, Whole-time Director : 5 Years from 11th

August, 2010

- The contract may be terminated by either party giving the other party three months notice or the Companypaying three months salary in lieu thereof.

- There is no separate provision for payment of Severance Fees.

(viii) There were no other pecuniary relationships or transactions of the Non-executive Directors vis-à-vis the Company.

(ix) As on 30th June, 2012, no Non-executive Director was holding any shares of the Company.

5. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE:

(i) The Board has constituted Shareholders'/Investors' Grievance Committee to oversee and review all matters connectedwith the transfer of Shares of the Company and redressal of Shareholders/Investors' complaints.

(ii) The composition of the Shareholders'/Investors' Grievance Committee and the details of meetings attended by itsmembers are given below:

Name Category No of MeetingsHeld Attended

Mr. D. S. Puri (Chairman) Promoter & Non-executive 4 4Mr. E. A. Kshirsagar (Member) Independent & Non-executive 4 4Mr. Ajai Chowdhry (Member)* Promoter & Non- executive 4 4

* Mr. Ajai Chowdhry ceased to be director of the Company w.e.f. 30th June, 2012.

(iii) The Committee met 4 times during the financial year 2011-12 on the following dates:

17th August, 2011 3rd November, 2011 30th January, 2012 25th April, 2012

(iv) Name, designation and address of Compliance Officer:

Mr. Sushil Kumar JainCompany SecretaryHCL Infosystems LimitedE- 4,5,6, Sector 11, NoidaTel: 0120-2526490Fax: 0120-2525196

(v) During the year the Company received 13 Complaints from SEBI/Stock Exchanges/MCA. All complaints were redressedto the satisfaction of the shareholder. No complaints were pending either at beginning or at the end of the year. Therewere no shares pending for transfer as on 30

th June, 2012.

6. NOMINATION COMMITTEE:

(i) The Board had constituted a Nomination Committee to, among other matters, advise the Company on appointment,screening and review of top management positions, building a leadership pipeline and identifying successors for keypositions.

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(ii) The composition of the Nomination Committee is given below:

Name CategoryMs. Anita Ramachandran (Chairperson) Independent & Non-executiveMr. E. A. Kshirsagar (Member) Independent & Non-executiveDr. Nikhil Sinha (Member) Non-executive

7. CODE OF BUSINESS CONDUCT AND ETHICS FOR DIRECTORS AND SENIOR MANAGEMENT:

The Company has adopted a comprehensive Code of Conduct for its Directors and Senior Management, which lays thestandards of business conduct, ethics and governance.

The Code has been circulated to all the members of the Board and Senior Management and they have affirmed complianceof the same.

The declaration signed by the CEO is given below:

"I hereby confirm that:

The Company has obtained from all the members of the Board and Senior Management, affirmation that they have compliedwith the Code of Conduct for Directors and Senior Management in respect of the financial year 2011-12."

Sd/-Harsh Chitale

CEO

8. UNLISTED SUBSIDIARY COMPANIES:

The Company has twelve unlisted subsidiaries as on 30th

June, 2012 as under:

S.N. Name of the Company Date of Incorporation / Acquisition1. Digilife Distribution and Marketing Services Limited 19th March, 20082. HCL Infocom Limited 17th December, 20083. HCL Infosystems MEA FZCO, Dubai (acquired) 4th July, 20104. HCL Infosystems LLC, Dubai (acquired) 4th July, 20105. HCL Infosystems MEA LLC Abu Dhabi (acquired) 4th July, 20106. RMA Software Park Private Limited (acquired) 7th July, 20097. HCL Insys Pte. Limited, Singapore 17th December, 20098. Pimpri Chinchwad eServices Limited 21st September, 20109. HCL Investments Pte. Limited, Singapore 29th November, 201010. HCL Infosystems South Africa (Pty) Limited, South Africa 9th May, 201111. HCL Touch Inc., US 29th August, 201112. HCL Infosystems Qatar WLL 26th January, 2012

Mr. Harsh Chitale and Mr. J. V. Ramamurthy, the Whole-time Directors of the Company are also Directors of Digilife Distributionand Marketing Services Limited and HCL Infocom Limited. Mr. J. V. Ramamurthy is also Director of RMA Software Park PrivateLimited and HCL Infosystems MEA FZCO, Dubai. The Minutes of the Board Meetings of the subsidiary companies are regularlyplaced before the Board.

9. GENERAL BODY MEETINGS:

(i) The last three Annual General Meetings were held as under:

Financial Year Date Time Location2010-11 4th November, 2011 10:30 A.M Air Force Auditorium, Subroto Park, Dhaula Kuan, New Delhi-1100102009-10 27th October, 2010 10:30 A.M FICCI Auditorium, 1, Tansen Marg, New Delhi-1100012008-09 23rd October, 2009 10:00 A.M FICCI Auditorium, 1, Tansen Marg, New Delhi-110001

(ii) No special resolutions were passed at last three AGMs.(iii) The following ordinary resolution has been passed through postal ballot, the results of which was declared on 16th August,

2012:"Transfer of the Company's Computing Products Manufacturing and Channel Business to a wholly owned subsidiary/group/affiliate/other entity"

10. CEO/CFO CERTIFICATION:The Certificate as stipulated in clause 49(V) of the Listing Agreement with the Stock Exchanges was placed before the Boardalong with the financial statements for the year ended 30

th June, 2012 and the Board reviewed the same.

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11. DISCLOSURES:(i) All related party transactions including those with wholly owned subsidiaries have been reviewed by the Audit Committee

and Board of Directors and were found to be in normal course of business and on arm's length basis. The details ofrelated party transactions have been disclosed in Note 54 of the financial statements for the financial year ended 30thJune, 2012.

(ii) The Company has complied with the requirements of the Stock Exchanges/SEBI/any Statutory Authority on all mattersrelated to capital markets during the last three years. There are no penalties or strictures imposed on the Company byStock Exchanges or SEBI or any statutory authorities relating to the above.

(iii) A qualified Practicing Company Secretary carried out a Secretarial Audit to reconcile the total admitted capital withNational Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the totalissued and listed capital. The secretarial audit report confirms that the issued/paid-up capital is in agreement with thetotal number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

(iv) The Company has developed a well-defined Risk Management Framework to track and evaluate all business risks andprocess gaps. The top management of the Company takes periodic review of the business processes and environmentrisk analysis reports by the respective business heads. It covers identifying, analysing, planning, monitoring, controllingand preventing risks.

(v) The Company has fulfilled the following non-mandatory requirements as prescribed in Annexure 1D to Clause 49 of theListing Agreement with the Stock Exchanges:(a) The Company has set up an Employees Compensation & Employees Satisfaction Committee. Please see para 4 for

further details.(b) The statutory financial statements of the Company are unqualified.(c) The Company has adopted a whistle blower policy to act as a deterrent to malpractices, and to encourage openness,

promote transparency, underpin the risk management systems & help protect the reputation of the Company.

12. MEANS OF COMMUNICATION:

(i) Quarterly/Half Yearly/Annual Results: The Quarterly, Half Yearly and Annual Results of the Company are sent to theStock Exchanges immediately after they are approved by the Board.

(ii) News Releases: The Quarterly, Half Yearly and Annual Results of the Company are published in the prescribed formatwithin 48 hours of the conclusion of the meeting of the Board in which they are considered, at least in one Englishnewspaper circulating in the whole or substantially the whole of India and in one Vernacular newspaper of the Statewhere the Registered Office of the Company is situated.

The quarterly financial results during the financial year 2011-12 were published as detailed below:

Quarter Date of Board Meeting Date of Publication Name of the Newspaper(FY 2011-12)

1 3rd & 4th November, 2011 5th November, 2011 The Financial Express & Veer Arjun2 30th & 31st January, 2012 1st February, 2012 Business Standard & Veer Arjun3 24th & 25th April, 2012 26th April, 2012 Business Standard & Veer Arjun

(iii) Website: The Company's website www.hclinfosystems.com contains a separate section on 'Investors' where the latestshareholders information is available. The Quarterly, Half Yearly and Annual Results are regularly posted on the website.Press releases made by the Company from time to time and presentations made to investors and analysts are displayedon the Company's website.

(iv) Annual Report: Annual Report containing, inter alia, Audited Annual Accounts, Consolidated Financial Statements,Directors' Report, Auditors' Report and other important information is circulated to members and others entitled thereto.The Management Discussion and Analysis (MDA) Report forms part of the Annual Report. The Annual Report is alsoavailable on the Company's website.

(v) Chairman’s Communique: The Highlights of the quarterly financial results along with a message from the Chairmanare sent to each shareholder. Printed copy of the Chairman's Speech is distributed to all the shareholders at the AnnualGeneral Meetings.

(vi) Reminders to Investors: Reminders for unpaid/unclaimed dividend are sent to the Shareholders as per records.

13. GENERAL SHAREHOLDERS’ INFORMATION:

(i) Annual General Meeting:Date : Wednesday, 7th November, 2012Time : 10:30 A.M.Venue : FICCI Auditorium, 1, Tansen Marg, New Delhi-110001

(ii) The Company follows July to June year end.

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(iii) Financial Calendar (Tentative Calendar for the financial year 2012-13) :Adoption of Results for the quarter ending 30th September, 2012 : 6th & 7th November, 2012Adoption of Results for the quarter ending 31st December, 2012 : 23rd & 24th January, 2013Adoption of Results for the quarter ending 31st March, 2013 : 24th & 25th April, 2013Adoption of Results for the year ending 30th June, 2013 : 28th & 29th August, 2013

(iv) Date of Book Closure : 5th November to 7th November, 2012 (both days inclusive)

(v) Listing on Stock Exchanges : National Stock Exchange of India Limited,Bombay Stock Exchange Limited

(vi) Stock Codes/Symbol:National Stock Exchange of India Limited : HCL-INSYSBombay Stock Exchange Limited : Physical Form - 179

: Electronic Form - 500179

(vii) Market price data:

Month Company's Share PriceHigh Low

(`) (`)July, 2011 97.80 84.50August, 2011 86.65 59.90September, 2011 71.00 58.00October, 2011 65.65 60.00November, 2011 67.60 48.10December, 2011 53.70 38.50January, 2012 48.50 36.10February, 2012 51.70 42.35March, 2012 51.20 42.25April, 2012 49.00 43.20May, 2012 45.75 40.10June, 2012 45.35 39.00

(source : The National Stock Exchange of India Ltd.)

(viii) Registrar and Transfer Agents (RTA):

Name & Address : M/s. Alankit Assignments Limited,Alankit House,2E/21, Jhanewalan Extension,New Delhi - 110 055

Contact Person : Mr. J. K. Singla, Senior ManagerPhone No. : 91-11-23541234Fax No. : 91-11-42541967E-Mail : [email protected]

(ix) Share Transfer System:

Transfer of dematerialized shares is done through the depositories with no involvement of the Company. As regardstransfer of shares held in physical form, the transfer documents can be lodged with Alankit Assignments Limited, theRTA of the Company, at their address mentioned above. Transfer of shares in physical form are normally processedwithin 10-15 days from the date of receipt, if the documents are complete in all respects.

(x) Shareholders’ Referencer:

The shareholders' referencer is available on the Company's website. Any shareholder who wishes to obtain copy of thesame can send his request to the Company Secretary.

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(xi) Dividend History for Last 5 years:

Financial Year Dividend Rate including Interim Dividend(Per equity share of ̀ 2/-)

`/share (%)2011-12 3.0 1502010-11 8.0 4002009-10 7.5 3752008-09 6.5 3252007-08 8.0 400

(xii) Distribution of Shareholding as on 30th June, 2012:

Shareholders Total SharesNo. of Equity Shares Number (%) Number (%)Upto 500 48343 82.13 6994550 3.14501-1000 5171 8.79 4186249 1.891001-2000 2779 4.72 4189959 1.882001-3000 909 1.54 2325096 1.043001-4000 376 0.64 1352679 0.614001-5000 303 0.51 1435617 0.645001-10000 502 0.85 3669579 1.6410001 and above 481 0.82 198725900 89.16TOTAL 58864 100.00 222879629 100.00

(xiii) Shareholding pattern as on 30th June, 2012:

Category No. of shares Percentage (%)Promoters / Promoters Group 11,31,53,358 50.77Mutual Funds / UTI 43,29,025 1.94Financial Institutions / Banks 41,01,081 1.84Foreign Institutional Investors 6,15,14,931 27.60Bodies Corporate 66,61,082 2.99Indian Public 3,19,85,135 14.35NRI / OCBs 11,35,017 0.51TOTAL 22,28,79,629 100.00

(xiv) Dematerialization of shares:

The shares of the Company are compulsorily traded in dematerialized form and are available for trading on both thedepositories in India i.e. NSDL & CDSL. As on 30th June, 2012, 98.53% equity shares of the Company were held indematerialized form.

The Company's shares are regularly traded on the NSE and the BSE in electronic form.

Under the Depository system, the International Securities Identification Number (ISIN) allotted to the Company's sharesis INE 236A01020.

(xv) The Company has not issued any GDRs/ADRs There are no outstanding Warrants or Convertible instruments as on 30th

June, 2012.

(xvi) Plant locations:

- R.S. Nos: 34/4 to 34/7 and part of 34/1, Sedarapet, Puducherry - 605 111- R.S. Nos: 107/5, 6 & 7, Main Road, Sederapet, Puducherry - 605 111- Plot No. 77, 78, South Phase, Ambattur Industrial Estate, Chennai - 600 058- Plot No. SPL. A2, Thattanchavadi, Industrial Area, Puducherry - 605 009- Plot Nos. 1, 2, 27 & 28, Sector- 5, I.I.E - Pant Nagar (SIDCUL-Rudrapur), Distt.-Udham Singh Nagar, Uttarakhand

- 263 153- F - 214, G - 215, EPIP, Sitapura Industrial Area, Jaipur, Rajasthan - 302 022

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(xvii) Address for Correspondence:

The shareholders may address their communication/suggestions/grievances/queries to the Registrar and Share TransferAgents at the address mentioned above, or to:

The Company SecretaryHCL Infosystems LimitedE – 4, 5, 6, Sector – 11,NOIDA (U.P.) – 201 301.Tel. No.: 0120-2526490,Fax: 0120-2525196Email: [email protected]

(xviii) Company Website:

The Company has its website namely www.hclinfosystems.com. This provides detailed information about the Company,its subsidiaries, products and services offered, locations of its corporate office and various sales offices etc. It alsocontains updated information on the financial performance of the Company and procedures involved in completingvarious investors' related transactions expeditiously. The quarterly results, annual reports and shareholding distributionsetc. are updated on the website of the Company from time to time.

Auditors' Certificate regarding compliance of conditionsof Corporate GovernanceTo the Members of HCL Infosystems Limited

We have examined the compliance of conditions of Corporate Governance by HCL Infosystems Limited, for the year ended June30, 2012, as stipulated in Clause 49 of the Listing Agreements of the said Company with stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examinationwas carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49 of theListing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures and implementationthereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an auditnor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company hascomplied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For Price WaterhouseFirm Registration Number - 301112E

Chartered Accountants

Abhishek RaraPlace : Noida PartnerDate : August 24, 2012 Membership No. 77779

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Auditors' ReportToThe Members of HCL Infosystems Limited

1. We have audited the attached Balance Sheet of HCL Infosystems Limited (the "Company") as at June 30, 2012, and therelated Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto, which wehave signed under reference to this report. These financial statements are the responsibility of the Company's Management.Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used and significant estimates made byManagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment)Order, 2004 (together the "Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of'The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us, we give in the Annexure a statementon the matters specified in paragraphs 4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessaryfor the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreementwith the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on June 30, 2012 and taken on record by theBoard of Directors, none of the directors is disqualified as on June 30, 2012 from being appointed as a director in termsof clause (g) of sub-section (1) of Section 274 of the Act;

(f ) In our opinion and to the best of our information and according to the explanations given to us, the said financialstatements together with the notes thereon and attached thereto give, in the prescribed manner, the information requiredby the Act, and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at June 30, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For Price WaterhouseFirm Registration Number: 301112EChartered Accountants

Abhishek RaraPlace : Noida PartnerDate : August 24, 2012 Membership Number: 77779

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Annexure To Auditors' Report[Referred to in paragraph 3 of the Auditors' Report of even date to the members of HCL Infosystems Limited on thefinancial statements for the year ended June 30, 2012]

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, offixed assets.

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all theitems over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by theManagement during the year and no material discrepancies have been noticed on such verification.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has notbeen disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. Inrespect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, thefrequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable andadequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records ofinventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. The Company has not granted/taken any loans, secured or unsecured, to companies, firms or other parties covered in theregister maintained under Section 301 of the Act. Therefore, the provisions of Clause 4(iii)[(b),(c) and (d) /(f ) and (g)] of thesaid Order are not applicable to the Company.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control systemcommensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assetsand for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company,and according to the information and explanations given to us, we have neither come across nor have been informed of, anycontinuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts orarrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 havebeen so entered.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance ofsuch contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the yearhave been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act andthe rules framed there under.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to theRules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) ofsub-section (1) of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records havebeen made and maintained. We have not, however, made a detailed examination of the records with a view to determinewhether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in ouropinion, the Company is generally regular in depositing undisputed statutory dues in respect of works contract tax andemployees' state insurance, though there has been a slight delay in a few cases, and is regular in depositing undisputedstatutory dues, including provident fund, investor education and protection fund, income tax, wealth tax, service tax,sales tax, customs duty and excise duty, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, theparticulars of dues of income tax, sales tax and excise duty as at June 30, 2012 which have not been deposited onaccount of a dispute, are as follows:

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Name of the Statute Nature Amount Amount Period to Forum whereof the dues (`/Crores) deposited which the the dispute

under protest amount is pending(`/Crores) relates

Uttar Pradesh Trade Sales Tax 14.31 5.13 2002-2008 Commercial Tax Tribunal, Noida /Tax Act, 1948 High Court, Allahabad / Joint

Commissioner (Appeals)Commercial Tax, Noida/Additional Commissioner(Appeals) CommercialTax, Noida

Uttar Pradesh Value Commercial Tax 0.82 0.44 2008-2012 Joint Commissioner (Appeals) ofAdded Tax Act, 2008 (Including Penalty) Commercial Tax, Noida/

Additional Commissioner(Appeals) CommercialTax, Noida

Delhi Sales Tax Act, 1975 Sales Tax 0.08 0.03 2003-2005 Joint Commissioner (Appeals)Sales Tax, Delhi

Delhi Value Added Trade Tax 2.08 0.08 2005-2009 Additional Commissioner of SalesTax Act, 2004 Tax, Delhi / Deputy

Commissioner (Appeals) salesTax, Delhi

Tamil Nadu General Sales Tax 2.64 0.97 2003-2009 Commercial Tax, Officer,Sales Tax Act, 1959 Chennai / Deputy

Commissioner (Appeals) ofChennai Sales Tax, Chennai

West Bengal Sales Tax 1.83 - 2005-2009 Joint Commissioner (Appeals) ofSales Tax Act, 1994 Sales Tax, Kolkata

Rajasthan Sales Sales Tax 0.04 0.01 1998-2006 Deputy Commissioner (Appeals)Tax Act, 1994 of Sales Tax, Jaipur

Rajasthan Value Commercial tax 0.16 - 2006-2008 Deputy Commissioner (Appeals)Added Tax Act, 2003 of Commercial Tax, Jaipur

Kerala General Sales Sales Tax 1.08 0.55 2001-2012 Tribunals of Sales Tax, Kochi /Tax Act, 1963 Deputy Commissioner (Appeals)

Sales Tax, Kochi /Check PostAuthorities, Kerala

Karnataka Value Sales Tax 5.09 2.58 2005-2012 Assessing Officer, Bengaluru/Added Tax Act, 2003 Deputy Commissioner Apeal

Bengaluru/Joint CommissionerAppeals Sales Tax, Bengaluru

Andhra Pradesh Value Sales Tax 0.25 0.24 2005-2008 Commissioner (Appeals) ofAdded Tax Act, 2005 Commercial Tax, Hyderabad

Punjab General Sales Tax (including 0.06 - 2004-2005 High Court, Chandigarh &Sales Tax Act, 1948 Penalty) Punjab

Punjab Value Added Sales Tax (including 0.72 0.50 2007-2009 Tribunal, ChandigarhTax Act, 2005 Penalty)

Jammu & Kashmir Value Sales Tax (including 2.75 0.08 2007-2009 Deputy Commissioner Appeals,Added tax Act, 2005 Penalty) Jammu

Uttrakhand Value Sales Tax (including 12.98 1.48 2006-2009 Joint Commissioner CommercialAdded Tax Act, 2005 Penalty) Tax, Dehradun/ Deputy

Commissioner Commercial Tax,Dehradun

Central Excise Act, 1944 Excise Duty 9.63 0.64 1980-2010 Central Excise & Service Tax(Including Penalty) Appellate Tribunal /

Commissioner (Appeals)

Income Tax Act, 1961 Income Tax 3.95 0.89 1989-2009 Commissioner (Appeals) / High Court

Total 58.47 13.62

For detailed listing refer Note 53

10. The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in thefinancial year ended on that date or in the immediately preceding financial year.

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11. According to the records of the Company examined by us and the information and explanation given to us, the Companyhas not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheetdate.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures andother securities. Therefore, the provisions of Clause 4(xii) of the Order are not applicable to the Company.

13. As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable tothe Company, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly,the provisions of Clause 4(xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions of the guaranteesgiven by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial tothe interest of the Company.

16. In our opinion, and according to the information and explanations given to us, the term loans have been applied, on anoverall basis, for the purposes for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company,we report that the no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintainedunder Section 301 of the Act during the year. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable tothe Company.

19. The Company had created security or charge in respect of debentures issued in earlier years and redeemed during the yearand which were not outstanding at the year-end.

20. The Company has not raised any money by public issues during the year. Accordingly, the provisions of Clause 4(xx) of theOrder are not applicable to the Company.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generallyaccepted auditing practices in India, and according to the information and explanations given to us, except for processingof fraudulent expenses by certain employees, whose services have since been terminated, resulting in an aggregate loss of` 0.52 Crores, by way of write off of fraudulent expenses, we have neither come across any instance of fraud on or by theCompany, noticed or reported during the year, nor have we been informed of such case by the Management.


Abhishek RaraPlace : Noida PartnerDate : August 24, 2012 Membership Number: 77779

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Notes As at 30.06.2012 As at 30.06.2011`/Crores `/Crores

Equity and Liabilities:

Shareholders' fundsShare capital 2, 3 44.58 44.58Reserves and surplus 3 1,872.58 1,917.16 1,902.46 1,947.04

Non-current liabilitiesLong-term borrowings 4 123.07 186.08Other long-term liabilities 5 148.83 56.45Long-term provisions 6 23.65 295.55 26.91 269.44

Current liabilitiesShort-term borrowings 7 477.49 353.61Trade payables 8 1,637.87 1,438.63Other current liabilities 9 523.32 480.64Short-term provisions 10 15.81 2,654.49 76.51 2,349.39

Total Equity and Liabilities 4,867.20 4,565.87

Assets:

Non-current assetsFixed assets- Tangible assets 11 194.91 189.08- Intangible assets 11 57.25 42.98- Capital work-in-progress 35.54 18.51- Intangible assets under development 10.52 -Non-current investments 12 117.82 86.62Deferred tax assets (net) 33 22.73 16.80Long-term loans and advances 14 58.87 57.26Trade receivables 15 22.81 21.68Other non-current assets 16 336.78 857.23 158.86 591.79

Current assetsCurrent investments 13 431.77 618.43Inventories 17 658.95 586.25Trade receivables 18 1,180.61 1,244.14Cash and bank balances 19 224.20 234.69Short-term loans and advances 20 297.83 295.34Other current assets 21 1,216.61 4,009.97 995.23 3,974.08

Total Assets 4,867.20 4,565.87

Significant Accounting Policies 1

Balance Sheet as at June 30, 2012

This is the Balance Sheet referred to The notes referred to above form an integral part of thein our report of even date Balance Sheet

For Price Waterhouse For and on behalf of the Board of DirectorsFirm Registration Number-301112EChartered Accountants

ABHISHEK RARA HARSH CHITALE E.A. KSHIRSAGARPartner Chief Executive Officer DirectorMembership Number 77779 & Whole Time Director

Place : Noida SANDEEP KANWAR SUSHIL KUMAR JAINDated : August 24, 2012 Chief Financial Officer Company Secretary

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Notes Year ended 30.06.2012 Year ended 30.06.2011`/Crores `/Crores

Revenue:

Revenue from operations (gross) 22 10,380.81 11,062.40Less: Excise Duty 86.20 10,294.61 122.19 10,940.21Other income 23 97.95 74.08

10,392.56 11,014.29Expenses:

Cost of materials consumed 39 1,273.29 1,626.57Purchases of stock-in-trade 36 7,617.59 7,596.51Changes in inventories of finished goods, 24 (36.91) 230.80work-in-progress and stock-in-tradeOther direct expense 25 401.94 374.85Employee benefits expense 26 458.79 448.31Finance costs 27 80.09 73.97Depreciation and amortisation expense 11 43.12 33.20Other expenses 28 493.11 392.98

10,331.02 10,777.19

Profit before tax 61.54 237.10

Tax expenseCurrent tax 29.65 65.94Less: MAT Credit Entitlement (10.04) –

Current tax - For the year 19.61 65.94Current tax - For earlier years – 1.79Deferred tax 33 (5.93) 13.68 (7.86) 59.87

Profit for the year 47.86 177.23Earning per equity share (in `) 46Basic (of ` 2/- each) 2.15 8.08Diluted (of ` 2/- each) 2.15 8.08

Significant Accounting Policies 1

Statement of Profit & Loss for the year ended June 30, 2012

This is the Statement of Profit and Loss The notes referred to above form an integral part of thereferred to in our report of even date Statement of Profit and Loss




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Year ended 30.06.2012 Year ended 30.06.2011`/Crores `/Crores

1. Cash Flow from Operating Activities:Profit before tax 61.54 237.10Adjustments for:

Depreciation and Amortisation Expense 43.12 33.20Finance Costs 80.09 73.97Interest Income (33.08) (15.74)Dividend Income (1.97) (28.91)Net (Profit)/Loss on Sale of Fixed Assets (1.96) 0.16Fixed Assets Written Off 0.29 –Profit on Disposal of Unquoted (Others) Current Investments (41.09) (9.37)Provision for Doubtful Debts 62.52 35.72Provision for Doubtful Loans and Advances 4.36 7.52Provision for Doubtful Other Current Assets 0.71 0.41Provisions/Liabilities no longer required Written Back (17.01) (17.17)Provision for Gratuity and Other Employee Benefits (1.83) 2.72Diminution in the Value of Unquoted/Quoted(Others) Current Investments (0.20) 2.41Unrealised Foreign Exchange (Gain)/Loss 34.58 (6.03)Provision for Warranty Liability 6.07 134.60 (1.17) 77.72

Operating profit before working capital changes 196.14 314.82

Adjustments for changes in working capital:

- (Increase)/Decrease in Trade Receivables 1.93 (22.71) - (Increase)/Decrease in Loans and Advances and (239.59) (120.76)

Other Assets - (Increase)/Decrease in Inventories (72.70) 249.15 - Increase/(Decrease) in Liabilities 297.80 (12.56) (360.60) (254.92)

Cash generated from operations 183.58 59.90

- Taxes (Paid)/Received (Net of Tax Deducted at Source) (0.03) (41.78)

Net cash from operating activities (A) 183.55 18.12

2. Cash flow from Investing Activities:

Purchase of Fixed Assets (including Intangible Assets) (45.41) (82.67)Capital Work-In-Progress (including Intangible Assets (27.55) 5.74Under Development)Proceeds from Sale of Fixed Assets 5.42 0.44Proceeds from Sale of Current Investments 1,853.12 4,937.14Lease Rental Recoverable (237.07) (98.91)Purchase of Current Investments (1,639.02) (4,683.20)Interest Received 29.77 14.16Redemption/Maturity of Bank Deposits(with original maturity of more than three months) 0.04 -Movement in Margin Money Account 0.45 (2.91)Dividend Received on Current Investments 1.97 28.91Proceeds from Sale of Subsidiary 24.05 –Purchase of Investment in Subsidiary (31.20) (65.43) (40.84) 77.86

Net cash from/(used in) investing activities (B) (65.43) 77.86

Cash Flow Statement for the year ended June 30, 2012

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3. Cash Flow from Financing Activities:Share Capital issued - 0.93Securities Premium Received (Net) - 52.03Secured Loans

Short term paid (6.12) (36.38)Long term paid (32.74) (5.21)

Unscured LoansShort term received 155.96 55.00Long term received - 79.34Long term paid (30.28) (25.14)

Interest Paid (85.51) (73.38)Dividend Paid (111.34) (174.87)Corporate Dividend Distribution Tax Paid (18.09) (128.12) (29.13) (156.81)

Net cash (used in) financing activities (C) (128.12) (156.81)

Net Increase/(Decrease) in Cash andCash Equivalents (A+B+C) (10.00) (60.83)

Opening Balance of Cash and Cash Equivalents 230.50 291.33

Closing Balance of Cash and Cash Equivalents 220.50 230.50[Includes exchange rate fluctuation of ` 3.39 Crores(2011 - ` 0.08 Crores)]

Cash and cash equivalents comprise 220.50 230.50Cash, Cheques and Drafts (on hand) 76.34 60.40Balances with Banks on Current Accounts 138.03 170.10Balances with Banks on Deposits Accounts 6.13 –

Notes:1. The above Cash Flow Statement has been prepared under the indirect method set out in Accounting Standard-3, notified

u/s 211(3C) of Companies Act, 1956.2. Cash and cash equivalents include the following balances with banks which are not available for use by the

Company:Year ended Year ended

30.6.2012 30.06.2011`/Crores `/Crores

Unclaimed Dividend 3.90 3.79

3. Figures in brackets indicate cash outgo.

Cash Flow Statement for the year ended June 30, 2012

This is the Cash Flow Statementreferred to in our report of even date




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1. SIGNIFICANT ACCOUNTING POLICIES

a. BASIS OF PREPARATION

These financial statements have been prepared under the historical cost convention, on the accrual basis in accordancewith the accounting principles generally accepted in India. These financial statements have been prepared to comply inall material aspects with the Accounting Standards notified under Section 211(3C) [Companies (Accounting Standards)Rule, 2006, as amended] the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle andother criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the timebetween the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company hasascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities,except for System Integration business. The System Integration business which comprises of long-term contracts andhave an operating cycle exceeding one year. For classification of current assets and liabilities related to System Integrationbusiness, the Company elected to use the duration of the individual contracts as its operating cycle.

b. FIXED ASSETS

Tangible Fixed Assets including in-house capitalisation and Capital work-in-progress are stated at cost except thosewhich are revalued from time to time on the basis of current replacement cost/value to the Company, net of accumulateddepreciation.

Assets taken on finance lease on or after April 1, 2001 are stated at fair value of the assets or present value of minimumlease payments whichever is lower.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the futurebenefits from the existing asset beyond its previously assessed standard of performance.

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at costare recognised in the Statement of Profit and Loss.

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, ifany. Intangible assets are amortised on a straight line basis over their estimated useful lives.

c. DEPRECIATION AND AMORTISATION

(a) Depreciation and amortisation has been calculated as under:

(i) Depreciation on tangible fixed assets is provided on a pro-rata basis using the straight-line method based oneconomic useful life determined by way of periodical technical evaluation. Intangible assets (other thanGoodwill) are amortised over their estimated useful life.

Economic useful lives which are not exceeding those stipulated in Schedule XIV of the Companies Act, 1956are as under:

Tangilble Assets:Plant & Machinery 4-8 yearsBuildings

- Factory 25-28 years- Others 50-58 years- Capitalised prior to 1.5.1986 As per Section 205(2)(b) of the Companies Act, 1956

Furniture and Fixtures 4-6 yearsAir Conditioners 3-6 yearsVehicles 4-6 yearsOffice Equipments 3-6 yearsComputers 3-5 years

Intangible Assets (other than Goodwill):Intellectual Property Rights 5-7 yearsSoftware 1-5 years

Notes to the Financial Statements

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(ii) The assets taken on finance lease on or after April 1, 2001 are depreciated over their expected useful lives.

(b) Leasehold Land is amortised over a period of lease. Leasehold improvements are amortised on straight-line basisover the period of three years or lease period whichever is lower.

(c) Goodwill arising on acquisition is tested for impairment at each balance sheet date.

(d) Individual assets costing ` 5,000 or less are depreciated/amortised fully in the year of acquisition.

(e) The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expecteduseful life of the asset is significantly different from previous estimates, the amortisation period is changedaccordingly. Gains or losses arising from the retirement or disposal of an intangible asset are determined as thedifference between the net disposal proceeds and the carrying amount of the asset and recognised as income orexpense in the Statement of Profit and Loss.

d. INVESTMENTS

Long-term investments are stated at cost of acquisition inclusive of expenditure incidental to acquisition. Any decline inthe value of the said investment, other than a temporary decline, is recognised and charged to Statement of Profit andLoss.

Current investments are carried at lower of cost or fair value where fair value for mutual funds is based on net assetvalue and for bonds is based on market quote.

e. INVENTORIES

Raw Materials and Components held for use in the production of Finished Goods and Work-In-Progress are valued atcost if the finished goods in which they will be incorporated are expected to be sold at or above cost. If there is a declinein the price of materials/ components and it is estimated that the cost of finished goods will exceed the net realisablevalue, the materials/components are written down to net realisable value measured on the basis of their replacementcost. Cost is determined on the basis of weighted average.

Finished Goods, Stock-In-Trade and Work-In-Progress are valued at lower of cost and net realisable value.

Cost of Finished Goods and Work-In-Progress includes cost of raw materials and components, direct labour andproportionate overhead expenses. Cost is determined on the basis of weighted average.

Stores and Spares are valued at lower of cost and net realisable value/future economic benefits expected to arise whenconsumed during rendering of services. Adequate adjustments are made to the carrying value for obsolescence. Cost isdetermined on the basis of weighted average.

Goods In-Transit are valued inclusive of custom duty, where applicable.

f. FOREIGN CURRENCY TRANSACTIONS

a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchangedifferences arising on settlement of transactions, are recognised as income or expense in the year in which theyarise.

b) At the balance sheet date, all monetary items denominated in foreign currency, are reported at the exchange ratesprevailing at the balance sheet date and the resultant gain or loss is recognised in the Statement of Profit and Loss.Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reportedusing the exchange rate at the date of the transaction.

c) With respect to exchange differences arising on translation of long term foreign currency monetary items having aterm of 12 months or more, from July 1, 2011 onwards, the Company has adopted the following policy:

(i) Exchange differences relating to long term foreign currency monetary items, arising during the year, in so faras they relate to the acquisition of a depreciable capital asset are added to or deducted from the cost of theasset and depreciated over the balance life of the asset.


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(ii) In other cases, such differences are accumulated in the "Foreign Currency Monetary Translation DifferenceAccount" and amortised over the balance period of the long term assets/liabilities but not beyond March 31,2020.

d) In case of forward foreign exchange contracts where an underlying asset or liability exists at the balance sheetdate, the premium or discount arising at the inception of forward exchange contracts is amortised as expense orincome over the life of the contract. Exchange differences on such a contract are recognised in the Statement ofProfit and Loss in the reporting period in which the exchange rate change.

e) Forward exchange contracts outstanding as at the year end on account of firm commitment / highly probableforecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Lossand gains are ignored in accordance with the Announcement of Institute of Chartered Accountants of India on'Accounting for Derivatives' issued in March 2008.

f ) Any profit or loss arising on cancellation or renewal of a forward exchange contract are recognised as income or asexpense for the period.

g) The financial statements of an integral foreign operation are translated using the principles and procedures as ifthe transactions of the foreign operation are those of the Company itself.

g. EMPLOYEE BENEFITS

Defined Benefit:

Gratuity

The Company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordancewith the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees atretirement, death, incapacitation or termination of employment, of an amount based on the respective employee'ssalary and the tenure of employment. The Company's liability is actuarially determined (using the Projected Unit Creditmethod) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year inwhich they arise.

Provident Fund

Provident Fund contributions are made to a multi-employer Trust administered by the Company. The Company's liabilityis actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fundsize maintained by the Trust set up by the Company is additionally provided for. Actuarial losses/gains are recognised inthe Statement of Profit and Loss in the year in which they arise.

Other Benefits:

Compensated Absences

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end ofthe year end are treated as short term employee benefits. The obligation towards the same is measured at the expectedcost of accumulating compensated absences as the additional amount expected to be paid as a result of the unusedentitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the endof the year end are treated as other long term employee benefits. The Company's liability is actuarially determined(using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statementof Profit and Loss in the year in which they arise.

Defined Contribution:

Company's contribution towards Superannuation Fund is accounted for on accrual basis.The Company makes defined contributions to a Superannuation Trust established for the purpose. The Company hasno further obligation beyond the monthly contributions.


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h. REVENUE RECOGNITION

(a) Sales, after adjusting trade discount, are inclusive of excise duty and the related revenue is recognised on transferof all significant risks and rewards of ownership to the customer and when no significant uncertainty exists regardingrealisation of the consideration.

(b) Composite contracts, outcome of which can be reliably estimated, where no significant uncertainty exists regardingrealisation of the consideration, revenue is recognised in accordance with the percentage completion method,under which revenue is recognised on the basis of cost incurred as a proportion of total cost expected to be incurred.The foreseeable losses on the completion of contract, if any, are provided for immediately.

(c) Service income includes income:

i) From maintenance of products and facilities under maintenance agreements and extended warranty, which isrecognised upon creation of contractual obligations rateably over the period of contract, where no significantuncertainty exists regarding realisation of the consideration.

ii) From software services:

(a) The revenue from time and material contracts is recognised based on the time spent as per the terms ofcontracts.

(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeablelosses, if any, on the completion of contract are recognised immediately.

(d) Contract-in-progress:

For System Integration business, difference between costs incurred plus recognised profit/less recognised lossesand the amount due for payment is disclosed as contract in progress.

i. GOVERNMENT GRANTS

Revenue grants, where reasonable certainty exists that the ultimate collection will be made are recognised on a systematicbasis in Statement of Profit and Loss over the periods necessary to match them with the related cost which they areintended to compensate.

j. ROYALTY

Royalty expense, net of performance based discounts, is recognised when the related revenue is recognised.

k. LEASES

a) Assets taken under leases where the Company has substantially all the risks and rewards of ownership are classifiedas finance leases. Such assets are capitalised at the inception of the lease at the lower of fair value or the presentvalue of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid isallocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on outstandingliability for each period.

b) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as anasset under the lease.

c) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on straight-line basisover the lease term.

d) Profit on sale and leaseback transactions is recognised over the period of the lease.

e) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in thelease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is recognisedover the period of the lease so as to yield a constant rate of return on the net investment in the lease.


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f ) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over thelease term.

g) In sale and leaseback transactions and further sub-lease resulting in financial leases, the deemed sale is recognisedat fair value at an amount equal to the net investment in the lease where substantially all risks and rewards ofownership have been transferred to the sub-lessee. A liability is created at the inception of the lease at the lower offair value or the present value of minimum lease payments for sale and leaseback transaction. Each lease rentalpayable/receivable is allocated between the liability/receivable and the interest cost/income, so as to obtain aconstant periodic rate of interest on outstanding liability/receivable for each period.

l. CURRENT AND DEFERRED TAX

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profitor loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordancewith the taxation laws prevailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferredtax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certaintythat sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferredtax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enactedby the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognised deferred tax assets, ifany.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognisedamounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred taxliabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current taxand where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governingtaxation laws.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidencethat the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheetdate and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincingevidence to the effect that the Company will pay normal income tax during the specified period.

m. PROVISIONS AND CONTINGENT LIABILITIES

The Company creates a provision when there is a present obligation as a result of a past event that probably requires anoutflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingentliability is made when there is a possible obligation or a present obligation that probably will not require an outflow ofresources or where a reliable estimate of the amount of the obligation cannot be made.

n. USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires themanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosureof contingent liabilities at the date of the financial statements and the results of operations during the reporting period.Examples of such estimates include estimate of cost expected to be incurred to complete performance under compositearrangements, income taxes, provision for warranty, employment benefit plans, provision for doubtful debts andestimated useful life of the fixed assets. The actual results could differ from those estimates. Any revision to accountingestimates is recognised prospectively in current and future periods.

o. EMPLOYEE STOCK OPTION SCHEME

The Company calculates the employee stock compensation expense based on the intrinsic value method wherein theexcess of market price of underlying equity shares as on the date of the grant of options over the exercise price of theoptions given to employees under the Employee Stock Option Scheme of the Company, is recognised as deferred stockcompensation expense and is amortised over the vesting period on the basis of generally accepted accounting principlesin accordance with the guidelines of Securities and Exchange Board of India.


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p. BORROWING COSTS

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that necessarily takesubstantial period of time to get ready for their intended use are capitalised along with the respective fixed asset up tothe date such asset is ready for use. Other borrowing costs are charged to the Statement of Profit and Loss.

q. SEGMENT REPORTING

The accounting policies adopted for segment reporting are in conformity with the accounting policies consistentlyused in the preparation of financial statements. The basis of reporting is as follows:

a) Revenue and expenses distinctly identifiable to a segment are recognised in that segment. Identified expensesinclude direct material, labour, overheads and depreciation on fixed assets. Expenses that are identifiable with/allocable to segments have been considered for determining segment results.

Allocated expenses include support function costs which are allocated to the segments in proportion of the servicesrendered by them to each of the business segments. Depreciation on fixed assets is allocated to the segments onthe basis of their proportionate usage.

b) Unallocated expenses/income are enterprise expenses/income, which are not attributable or allocable to any ofthe business segment.

c) Assets and liabilities which arise as a result of operating activities of the segment are recognised in that segment.Fixed assets which are exclusively used by the segment or allocated on a reasonable basis are also included.

d) Unallocated assets and liabilities are those which are not attributable or allocable to any of the segments andincludes liquid assets like investments, bank deposits and investments in assets given on finance lease.

e) Segment revenue resulting from transactions with other business segments is accounted on the basis of transferprice which is at par with the prevailing market price.

r. IMPAIRMENT OF ASSETS

At each balance sheet date, the Company assesses whether there is any indication that an asset (tangible and intangible)may be impaired. If any such indication exists, the Company estimates the recoverable amount and if the carryingamount of the asset exceeds its recoverable amount, an impairment loss is recognised in the Statement of Profit andLoss to the extent the carrying amount exceeds the recoverable amount.

s. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investmentswith original maturities of three months or less.

t. RESEARCH AND DEVELOPMENT

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognised asan intangible asset when technical and commercial feasibility of the project is demonstrated, future economic benefitsare probable, the Company has ability and intention to complete the asset and use or sell it and cost can be measuredreliably.


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As at 30.06.2012 As at 30.06.2011`/Crores `/Crores

2- Share CapitalAuthorised55,00,00,000 Equity Shares (2011 - 55,00,00,000) of ` 2/- each 110.00 110.005,00,000 Preference Shares (2011 - 5,00,000) of `100/- each 5.00 5.00Total 115.00 115.00Issued, Subscribed and Paid up22,28,79,629 Equity Shares (2011-22,28,79,629)of ` 2/- each (Fully Paid up) 44.58 44.58Add: Shares Forfeited (1,000 shares of ` 1/- each) 0.00 0.00Total 44.58 44.58

Notes:(i) Rights attached to Equity Shares:

The Company has only one class of equity share having a face value of ` 2/- each. Each holder of equity shares is entitledto one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by theBoard of Directors is subject to the approval of the Shareholders in ensuing General Meeting, except in case of interimdividend.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets ofthe Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equityshares held by Shareholders.

(ii) Shares reserved for issue under options:For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 44.

(iii) Shareholders holding more than 5% of the aggregate shares in the Company.

As at 30.06.2012 As at 30.06.2011Particulars Number of % of Number of % of

Shares shares Shares Shares(a) HCL Corporation Private Limited (Formerly

known as 'Guddu Investments (Pondi)Private Limited') 95,500,651 42.85 95,500,651 42.85

(b) Franklin Templeton Investment Funds 21,249,492 9.53 21,287,892 9.55(c) HSBC Global Investment funds Mauritius Ltd. 16,300,000 7.31 16,300,000 7.31(d) AKM Systems Pvt. Ltd. 12,179,627 5.46 11,997,007 5.38

Notes to the financial Statements

3- Movement in Share capital and Reserves and surplus(`/Crores, except Number of Shares)

Particulars Number of Share Capital Securities General Debenture Surplus in TotalShares Capital Reserve* Premium Reserve Redemption the Statement Reserves

Account Reserves of Profit and andLoss Surplus

As at July 1, 2010 218,258,502 43.65 0.00 826.30 193.32 8.00 833.32 1,860.94Issue of equity shares on conversion of share warrants 4,620,667 0.93 - 69.74 - - - 69.74Issue of equity shares on exercise of employee stock options 460 0.00 # - - - - - -Profit for the year - - - - - - 177.23 177.23Proposed Dividend - - - - - - (44.58) (44.58)Corporate Dividend Distribution Tax on Proposed Dividend - - - - - - (7.23) (7.23)Interim Dividend - - - - - - (131.72) (131.72)Corporate Dividend Distribution Tax on Interim Dividend - - - - - - (21.88) (21.88)Transfer to Debenture Redemption Reserve - - - - - 4.00 (4.00) -Transfer to General Reserve - - - - 17.72 - (17.72) -Securities Premium Account utilised during the year - - - (0.04) - - - (0.04)

As at June 30, 2011 222,879,629 44.58 0.00 896.00 211.04 12.00 783.42 1,902.46

As at July 1, 2011 222,879,629 44.58 0.00 896.00 211.04 12.00 783.42 1,902.46Profit for the year - - - - - - 47.86 47.86Interim Dividend - - - - - - (66.88) (66.88)Corporate Dividend Distribution Tax on Interim Dividend - - - - - - (10.86) (10.86)Transfer from Debenture Redemption Reserve - - - - - (12.00) 12.00 -Transfer to General Reserve - - - 4.79 - (4.79) -

As at June 30, 2012 222,879,629 44.58 0.00 896.00 215.83 - 760.75 1,872.58

* Represents ` 37,135 (2011 - ` 37,135)# Represents ` 920

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4- Long-term borrowingsSecured:Debentures - 80.00

Term Loans- From Banks 53.34 -- From Others 0.11 6.19

53.45 86.19

Unsecured:Term Loans

- From Others 21.18 30.45Finance Lease Obligation (Refer Note 45) 48.44 69.44

69.62 99.89

TOTAL 123.07 186.08

Notes:1. The Company issued 800 Rated Taxable Secured Redeemable Non-Convertible Debentures of face value of ` 10 lakhs

each, aggregating to ` 80.00 Crores, at a coupon rate of 12.75% per annum payable annually on private placement basisto Life Insurance Corporation of India on December 19, 2008. These Debentures were redeemable at par at the end of 5thyear from the date of allotment, with a call option exercisable by the issuer, only at the end of 3 years from the date ofallotment and secured by way of first mortgage and charge on identified immovable and movable assets of the Company.During the year, on December 19, 2011 the Company has exercised it's call option and accordingly has repaid thesedebentures.

2. Secured Term Loan from Others amounting to ` 6.19 Crores (2011 - ` 11.82 Crores), out of which ` 6.08 Crores (2011 -` 5.63 Crores) is shown under current maturity of long term debt, is secured by way of first charge on specified assets ofthe Company as per the contract terms. The loans are repayable in 20 equal quarterly installments from the date of theloans which carries interest @ 7.8 to 8.5 % p.a.

3. Secured Term Loan from Banks amounting to ` 80.00 Crores (2011 - ` Nil), out of which ` 26.67 Crores (2011 - ` Nil) isshown under current maturity of long term debt, is secured by way of first charge on movable and immovable fixedassets of the Company. The loan is repayable in 6 half yearly installments from the date of the loan which carries interest@ 11.25 % p.a.

4. Unsecured Term loans from Others amounting to ` 31.26 Crores (2011 - ` 44.47 Crores) and ` 0.07 Crores (2011 - ` 0.21Crores), out of which ̀ 10.15 Crores (2011- ̀ 14.23 Crores) is shown under current maturity of long term debt, are repayablein 8 to 19 equal quarterly installments from the date of the loans and in 3 equal yearly installments from the date of theloan and balance payable in 4th year respectively which are interest free.

5- Other long-term liabilities

Trade Payables- Oustanding due to Other than Micro and Small

Enterprises [Including Acceptance ` 66.81Crores (2011 - ` Nil)] 121.15 10.39Deferred Revenue 24.39 42.89Others 3.29 3.17

TOTAL 148.83 56.45

6- Long-term provisions

Provision for Gratuity and Other Employee Benefits (Refer Note 48) 23.65 26.91

TOTAL 23.65 26.91

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7- Short-term borrowingsSecured:Loans from Banks

- Cash Credits 12.49 18.6112.49 18.61

Unsecured:Others

- Commercial Paper 265.00 280.00- Term Loans from Banks 200.00 55.00

465.00 335.00TOTAL 477.49 353.61Notes:Cash Credits along with non-fund based facilities from Banks are secured by way of hypothecation of stock-in-trade, bookdebts as first charge and by way of second charge on all the immovable and movable assets of the Company. The chargeranks pari-passu amongst Bankers.


9- Other current liabilitiesCurrent Maturities of Long-Term Debts (Refer Note 4) 42.90 19.85Current Maturities of Finance Lease Obligations 20.90 17.99[Refer Note 4 and 45]Interest Accrued but not due on Borrowings 0.75 6.65Unpaid Dividends* 3.90 3.79Deferred Revenue 146.66 162.50Advances Received from Customers 147.13 110.01Statutory Dues Payable 85.63 74.64Employees Benefits Payable 38.92 70.91Capital Creditors 36.53 14.30TOTAL 523.32 480.64

* There are no amount due and outstanding to be credited to Investor Education and Protection Fund under Section 205C ofthe Companies Act, 1956 as at June 30, 2012. These shall be credited and paid to the Fund as and when due.


10- Short-term provisionsProvision for Gratuity and Other Employee Benefits 4.66 3.23[Refer Note 48]Provision for Warranty Liability (Refer Note 32) 11.15 5.08Provision for Income Tax [Net of Advance Income Tax - 16.39of ` Nil (2011 - ` 687.85 Crores)]Provision for Proposed Dividend - 44.58Provision for Corporate Dividend Distribution Tax - 7.23on Proposed DividendTOTAL 15.81 76.51


8- Trade payablesTrade Payables

- Oustanding due to Micro and Small Enterprises 1.89 1.17(Refer Note 34)

- Oustanding due to Other than Micro and Small 1,635.98 1,437.46Enterprises [ncluding Acceptance ` 651.61 Crores(2011 - ` 380.45 Crores)]

TOTAL 1,637.87 1,438.63

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11- Fixed Assets`/Crores

Particulars Gross Block Depreciation/Amortisation Net Block

As at Additions Disposal As at As at Additions Disposal As at As at As at01.07.2011 30.06.2012 01.07.2011 30.06.2012 30.06.2012 30.06.2011

Tangible Assets:

Leasehold Land 15.24 - - 15.24 0.99 0.18 - 1.17 14.07 14.25Assets Given on Operating LeasePlant and Machinery 35.84 16.39 0.14 52.09 9.86 6.06 0.10 15.82 36.27 25.98

Own AssetsLand 25.71 - - 25.71 - - - - 25.71 25.71Buildings 92.15 1.49 2.39 91.25 19.54 2.20 0.55 21.19 70.06 72.61

Plant and Machinery 40.32 1.59 7.82 34.09 26.54 4.09 6.97 23.66 10.43 13.78Furniture and Fixtures 38.72 0.97 1.70 37.99 25.94 4.41 1.38 28.97 9.02 12.78Office Equipments 17.50 2.38 1.10 18.78 7.91 2.59 0.61 9.89 8.89 9.59Vehicles 1.88 1.25 0.02 3.11 1.22 0.33 0.02 1.53 1.58 0.66Computers 39.67 15.03 0.92 53.78 25.95 9.67 0.72 34.90 18.88 13.72

Sub-Total (a) 307.03 39.10 14.09 332.04 117.95 29.53 10.35 137.13 194.91 189.08

Previous Year 260.81 51.69 5.47 307.03 99.07 23.75 4.87 117.95 189.08

Intangible Assets:

Goodwill 1.25 - - 1.25 0.68 0.42 - 1.10 0.15 0.57Software 45.40 1.16 - 46.56 11.29 9.62 - 20.91 25.65 34.11Intellectual Property Rights(Refer Note 51(c)) 10.37 26.70 - 37.07 2.07 3.55 - 5.62 31.45 8.30

Sub-Total (b) 57.02 27.86 - 84.88 14.04 13.59 - 27.63 57.25 42.98Previous Year 14.07 42.95 - 57.02 4.59 9.45 - 14.04 42.98

Total (a+b) 252.16 232.06

Notes:1. Land (included under ‘Own Assets’) and Building at Ambattur amounting to ` 0.57 Crores (2011 - ` 0.57 Crores) are pending

registration in the name of the Company.2. Software comprise cost of acquiring licences and SAP implementation charges.3. Intellectual Property Rights comprise of designing and implementing education content.

12- Non Current investmentsAs at 30.06.2012 As at 30.06.2011

Face Units Amount Face Units AmountValue `/Crores Value `/Crores

Unquoted (Trade): Long Term (At Cost)Investments in Equity Instrumentsof SubsidiariesDigilife Distribution and Marketing ` 10 48,050,000 48.05 ` 10 19,050,000 19.05Services LimitedHCL Investments Pte. Limited SGD 1 and 1 in SGD* 7.30 SGD 1 and 1 in SGD

USD 1 and1,575,000 USD 1 and 1,275,000in USD* in USD 5.83

HCL Infocom Limited ` 10 330,000 0.33 ` 10 330,000 0.33HCL Insys Pte. Limited SGD 1 6,199,991 20.62 SGD 1 6,199,991 20.62RMA Software Park Private Limited ` 10 10,000 40.74 ` 10 10,000 40.74Pimpri Chinchwad eServices Limited ` 10 42,500 0.04 ` 10 50,000 0.05HCL Touch Inc. USD 0.01 150 in USD* 0.74 - - -

Total Non-Current Investments 117.82 86.62

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13- Current investmentsAs at 30.06.2012 As at 30.06.2011


(i) Quoted (others):Current (At Lower of Cost or Fair Value)6.85% India Infra FinanceCompany Limited 2014 ` 1,00,000 1,000 10.54 ` 1,00,000 1,000 10.389.02% Indian RenewableEnergy DevelopmentAgency Limited 2025 ` 1,000,000 100 10.32 ` 1,000,000 100 10.238.64% Power Grid Corporationof India Limited - 2020 ` 1,250,000 40 5.08 ` 1,250,000 40 5.038.87% Indian Renewable EnergyDevelopment Agency Limited - 2020 ` 1,000,000 100 10.29 ` 1,000,000 100 10.298.90% NABARD - 2013 ` 1,000,000 100 10.39 ` 1,000,000 100 10.458.80% Rural ElectrificationCorporation Limited - 2020 ` 1,000,000 100 10.13 ` 1,000,000 100 10.21Sub - Total (a) 56.75 56.59

(ii) Unquoted (Others): Current(At lower of Cost or Fair Value)Mutual Funds, Dividend OptionsKotak Floater Long Term - - - ` 10 37,136,064 37.47Birla Sunlife Savings Fund - - - ` 10 35,014,480 35.05IDFC Money Manager Fund - Treasury - - - ` 10 34,072,931 34.25Plan - Super Institutional Plan C GrowthReligare Ultra Short Term - - - ` 1000 280,224 28.07Fund - InstitutionalICICI Prudential Flexible Income Plan - - - ` 100 2,422,243 25.55Tata Floater Fund - - - ` 10 9,919,946 10.00UTI Treasury Advantage Fund - - - ` 1000 99,559 10.00Institutional WeeklyHDFC Cash Management Fund - - - ` 10 8,977,471 9.01- Treasury Advantage PlanReliance Money Manager Fund - - - ` 1000 50,116 5.01- Institutional Option - Weekly DividendSub - Total (b) - 194.41Mutual Funds, Growth OptionsReliance Quarterly Interval Fund - Series III - - - ` 10 40,762,439 53.81Reliance Money Manager Fund ` 1000 332,921 50.00 - - -- Institutional OptionIDFC Money Manager Fund - Treasury ` 10 38,324,749 50.00 ` 10 45,214,127 53.00Plan - Super Institutional Plan C GrowthKotak Floater Long Term ` 10 11,454,623 20.00 ` 10 26,161,703 41.14Birla Sunlife Savings Fund ` 100 2,863,382 60.00 ` 10 21,488,508 40.97HDFC Floating Rate Income - - - ` 10 24,035,573 40.00Fund - Short TermHDFC Cash Management ` 10 33,173,272 80.00 - - -Fund - Treasury Advantage PlanICICI Prudential Floating Rate Plan D - - - ` 100 2,764,693 40.00ICICI Prudential Flexible Income Plan ` 100 3,412,864 70.00 - - -IDFC Fixed Maturity Plan - 100 Days Series 3 - - - ` 10 29,572,535 29.57Tata Floater Fund ` 1000 91,153 15.02 ` 10 16,400,137 24.50Templeton Floating Rate Income - - - ` 10 13,409,919 18.00Fund Super InstitutionalReligare Ultra Short Term Fund - Institutional - - - ` 1000 112,230 15.10SBI-SHF Ultra Short Term Fund ` 1000 208,963 30.00 - - -Sub - Total (c) 375.02 356.09

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As at 30.06.2012 As at 30.06.2011Face Units Amount Face Units Amount

Value `/Crores Value `/Crores

(iii) Current Portion of Unquoted(Trade): Long Term(At cost less provision for otherthan temporary diminution)

Investments in Equity Instrumentsof SubsidiaryHCL Infinet Limited - - - ` 100 2,701,810 11.68Sub - Total (d) - 11.68Less: Permanent Diminution in the value of investment in HCL Infinet Limited (e) - 0.34Total Current Investments (a+b+c+d-e) 431.77 618.43* SGD = Singapore dollar;USD = United States dollar.Note : Net asset value of Current Investmentsin Mutual Funds as on June 30, 2012 is` 375.11 Crores (2011 - ` 557.72 Crores).Aggregate amount of Quoted Investments(Market value ` 56.75 Crores(2011 - ` 56.59 Crores) 56.75 56.59Aggregate amount of Unquoted Investments 492.84 648.46


14- Long-term loans and advancesUnsecured considered good:Capital Advances 2.18 1.50Deposits 24.41 21.07Loans and Advances to Subsidiaries 10.47 22.87Prepaid Expenses 5.71 11.80Advance Income Tax [Net of Provision forIncome Tax of ` 510.31 Crores (2011 - ` Nil)] 16.09 -Other Loans and Advances 0.01 0.02TOTAL 58.87 57.26

15- Trade receivables - Non-currentUnsecured:Other Debts

- Considered Good 22.81 21.68TOTAL 22.81 21.68

16- Other non-current assetsUnbilled Revenue 0.84 0.09Lease Rental Recoverable (Refer Note 45) 335.94 158.77TOTAL 336.78 158.86

17- InventoriesRaw Materials and Components[Including In-Transit ` 44.71 Crores (2011 - ` 4.23 Crores)] 180.91 145.85Work-In-Progress 1.14 1.46Finished Goods[Including In-Transit ` 28.12 Crores (2011 - ` 28.22 Crores)] 62.89 58.91Stock-In-Trade[Including In-Transit ` 31.75 Crores (2011 - ` 41.95 Crores)] 333.60 300.35Stores and Spares 80.41 79.68TOTAL 658.95 586.25

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18- Trade receivablesUnsecured:Debts outstanding for a period exceeding six monthsfrom the date they are due for payment

- Considered Good 289.02 249.00- Considered Doubtful 83.41 42.42

372.43 291.42Other Debts

- Considered Good 891.59 995.141,264.02 1,286.56

Less: Provision for Doubtful Debts 83.41 1,180.61 42.42 1,244.14

TOTAL 1,180.61 1,244.14

19- Cash and bank balancesCash and Cash EquivalentsBalances with Banks

- On Current Account 134.14 166.32Less: Money held in Trust 0.01 134.13 0.01 166.31

- On Dividend Account 3.90 3.79Cash on Hand 0.07 0.09Cheques on Hand 76.27 60.31Bank Deposits with original maturity of 6.45 0.32three months or lessLess: Money held in Trust 0.32 6.13 0.32 -Other Bank Balances (Expected to be realised within one year)Bank Deposits with original maturity of more thanthree months and upto twelve months - -Bank Deposits with original maturity of more than 0.18 0.18 0.22 0.22twelve monthsOn Margin Account 3.62 3.97TOTAL 224.20 234.69

20- Short-term loans and advancesUnsecuredConsidered GoodLoans and Advances to Subsidiaries 15.74 35.80Balances with Customs, Port Trust, Excise andSales Tax Authorities 64.44 58.28Advances to Creditors 83.47 55.22Deposits with Tax Authorities 12.43 4.66Other Deposits 29.87 47.65MAT Credit Entitlement 10.04 -Prepaid Expenses 72.17 86.42Others 9.67 7.31Considered DoubtfulDeposits and Other Advances 2.74 8.25Less: Provision for Doubtful Loans and Advances 2.74 - 8.25 -TOTAL 297.83 295.34

21- Other current assetsLease Rental Recoverable (Refer Note 45) 86.50 26.60Unbilled revenue 47.18 18.67Contract-in-progress (Refer Note 52)* 1,075.87 948.46Unamortised Premium on Forward Contracts 7.06 1.50TOTAL 1,216.61 995.23

* Out of above contract-in-progress, which includes retantion money, ` 589.73 Crores (2011 - ` 726.24 Crores) will be due afterone year.


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Year endedd 30.06.2012 Year endedd 30.06.2011`/Crores `/Crores

22- Revenue from operationsSale of Products (Refer Note 37) 9,681.60 10,411.37Sale of Services 693.88 647.76Other Operating Revenue

- Scrap Sale 1.01 0.60- Miscellaneous Income 4.32 2.67

TOTAL 10,380.81 11,062.40

23- Other incomeInterest Income

- On Lease Rental 27.53 12.68- On Fixed Deposits (Gross) 0.10 0.05- On Bonds from Quoted (Others) Current Investments 4.70 2.97- On Others 0.75 0.04

Dividend from Unquoted (Others) Current Investments 1.97 28.91Profit on Disposal of Unquoted (Others) Current Investments 41.09 9.37Net Profit/(Loss) on Sale of Fixed Assets 1.96 (0.16)Provisions/Liabilities no longer required written back 17.01 17.17Miscellaneous Income 2.84 3.05TOTAL 97.95 74.08

24- Changes in inventories of finished goods,work-in-progress and stock-in-tradeClosing Stock

- Finished Goods (Including in Transit) 62.89 58.91[Including excise duty of ` 2.72 Crores(2011 - ` 2.71 Crores)]

- Stock-In-Trade 333.60 300.35- Work-In-Progress 1.14 1.46

397.63 360.72Opening Stock

- Finished Goods (Including in Transit) 58.91 89.32[Including excise duty of ` 2.71 Crores(2011 - ` 5.00 Crores)]

- Stock-In-Trade 300.35 502.20- Work-In-Progress 1.46 -

360.72 591.52Changes in inventories of finished goods, work-in-progressand stock-in-trade (36.91) 230.80

25- Other direct expensePurchase of Services (Refer Note 45(e)(ii) 179.59 144.84Spares and Stores Consumed 130.27 107.87Power and Fuel 1.69 1.88Labour and Processing Charges 3.21 7.17Royalty 87.18 113.09TOTAL 401.94 374.85

26- Employee benefits expense (Refer Note 48)Salaries, Wages, Bonus and Gratuity 429.02 421.93Contribution to Provident and Other Funds 20.83 18.21Staff Welfare Expenses 8.94 8.17TOTAL 458.79 448.31

27- Finance costsInterest on Long-term and Short-term Borrowings 75.37 73.97Net Loss on Foreign Exchange Fluctuation 4.72 -

TOTAL 80.09 73.97

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28- Other expensesRent (Refer Note 45(d)(ii)) 25.53 24.94Rates and Taxes 9.19 7.16Printing and Stationery 3.53 4.11Communication 15.00 12.47Travelling and Conveyance 47.22 41.37Packing, Freight and Forwarding 46.95 50.32Legal Professional and Consultancy Charges [Refer Note 43] 73.62 43.81Training and Conference 5.33 4.36Office Electricity and Water 8.33 8.23Insurance 5.57 8.33Advertisement, Publicity and Entertainment 64.29 74.90Hire Charges 2.80 3.15Commission on Sales 6.00 19.73Bank Charges 17.72 12.78Provision for Doubtful Debts 62.52 35.72Provision for Doubtful Loans and Advances 4.36 7.52Provision for Doubtful Other Current Assets 0.71 0.41Fixed Assets Written-Off 0.29 -Diminution in the Value of Unquoted/Quoted (Others)Current Investments (0.20) 2.41Repairs

- Plant and Machinery 0.79 0.96- Buildings 1.46 3.25- Others 10.58 12.06

Net Loss/(Gain) on Foreign Exchange Fluctuation 64.25 (9.68)(other than considered as Finance Cost)Miscellaneous 17.27 24.67

Total 493.11 392.98

29- Land and Buildings and certain Plant and Machinery were revalued by external registered valuers after considering depreciationupto that date on the governing principle of current replacement cost/value. The amounts added/reduced on aforesaidrevaluation in 1992, 2005, 2006 and 2007 were as under:

Date of Revaluation `/Crores

Land June 30, 1992 4.44Land November 1, 2006 16.78Leasehold Land March 27, 2006 and

August 13, 2007 2.53Buildings June 30, 1992 6.44Buildings November 1, 2006 0.25Plant and Machinery June 30, 1992 (1.01)TOTAL 29.43Less: Goodwill 5.70Transferred to Revaluation Reserve 23.73Less:

-Expenditure incurred on acquisition of business in 1992 0.86-Loss on sale of Land 0.15-Depreciation and Amortisation 0.33-Adjusted on amalgamation of Subsidiaries in earlier years 22.39

Balance as at June 30, 2012 -


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30- Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided foramount to ` 3.50 Crores (2011 - ` 3.69 Crores).

31- Contingent Liabilities:a) Claims against the Company not acknowledged as debts:


Sales Tax* 44.89 44.58Excise* 9.63 9.32Income Tax* 3.95 3.95Octroi* 5.08 -Industrial Disputes, Civil Suits and Consumer Disputes 16.68 8.60

* Includes sum of ` 18.70 Crores (2011 - ` 9.12 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. Theuncertainties and possible reimbursements are dependent on the out come of the different legal processes which havebeen initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.

b)(i) Corporate Guarantee of ` 44.85 Crores (2011 - ` 35.88 Crores) was given to a Bank for working capital facilitiessanctioned to a 100% subsidiary, HCL Insys Pte. Limited, Singapore against which the total amount utilised as atJune 30, 2012 is ` 44.85 Crores (2011 - ` 9.85 Crores).

(ii) Corporate Guarantee of ` 20.00 Crores (2011 - ` 20.00 Crores) has been given to a Bank for working capital facilitiessanctioned to a 100% subsidiary, Digilife Distribution and Marketing Services Limited against which the total amountutilised as at June 30, 2012 is ` 1.07 Crores (2011 - ` 8.58 Crores).

(iii) Corporate Guarantee of ` Nil (2011 - ` 6.50 Crores) was given to a Bank for working capital facilities and ` Nil (2011- ` 6.10 Crores) was given to a non-banking finance company for operating lease sanctioned to a 100% subsidiary,HCL Infinet Limited (ceased to be a subsidiary with effect from October 31, 2011) against which the total amountutilised as at June 30, 2012 is ` Nil (2011 - ` 4.79 Crores) and ` Nil (2011 - ` 6.07 Crores) respectively.

(iv) Corporate Guarantee of ` 142.40 Crores (2011 - ` 73.11 Crores) was given to Banks for working capital facilitiessanctioned to HCL Infosystems MEA FZCO, Dubai (subsidiary of HCL Insys Pte. Limited, a subsidiary company) againstwhich the total amount utilised as at June 30, 2012 is ` 16.67 Crores (2011 - ` 35.33 Crores).

(v) Corporate Guarantee of ` 72.87 Crores (2011 - ` 132.93 Crores) was given to Banks for working capital facilitiessanctioned to Techmart Telecom Distribution FZCO, Dubai (joint venture of HCL Investments Pte. Limited, a subsidiarycompany) against which the total amount utilised as at June 30, 2012 is ` 72.87 Crores (2011 - ` 110.78 Crores).

32- The Company has the following provision for warranty liability in the books of accounts:


Opening Balance as on July 1 5.08 6.25Additions during the year 29.16 12.11Utilised/Reversed during the year 23.09 13.28Closing Balance as on June 30 11.15 5.08

The warranty provision has been recognised for expected warranty claims for the first year of warranty on products soldduring the year. Due to the very nature of such costs, it is not possible to estimate the timing of cash outflows due touncertainties relating to the outflows of economic benefits.

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33. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial year endedJune 30, 2012, although the actual tax liability of the Company has to be computed each year by reference to the taxableprofit for each fiscal year ended March 31.

b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at June 30, 2012 are:

`/CroresAs at Movement As at

30.06.11 during the year 30.06.12AssetsProvision for Doubtful Debts/Advances/Other Current Assets 13.02 14.75 27.77Impact of expenditure charged to statement of profit & loss but 15.10 (2.34) 12.76allowable for tax purpose in future yearsTotal (A) 28.12 12.41 40.53

LiabilitiesDepreciation 3.72 2.23 5.95Duties, Taxex & Cess allowed for tax purpose on payment basis 5.78 3.50 9.28Other timing differences 1.82 0.75 2.57Total (B) 11.32 6.48 17.80Net Deferred Tax Assets (A)-(B) 16.80 5.93 22.73Previous Year 8.94 7.86 16.80

34- Disclosure of Micro, Small and Medium Enterprises based on information available with the Company:


a) (i) Principal amount remaining unpaid to anysupplier as at the end of the year. 1.89 1.17

(ii) Interest due on the above amount. - -b. (i) Amount of interest paid in terms of section

16 of the Micro, Small andMedium Enterprises Development Act, 2006 (Act). - -

(ii) Amount of payments made to the suppliersbeyond the appointed day during the year. 36.82 13.01

c. Amount of interest due and payable for the periodof delay in making payment but without addingthe interest specified under the Act. - -

d. Amount of interest accrued and remaining unpaid atthe end of the year. 0.36 0.12

e. Amount of further interest remaining due andpayable even in the succeeding years, until such datewhen the interest dues as above are actually paid tothe small enterprises. 0.36 0.12

35. Expenditure on Research and Development:Year ended 30.06.2012 Year ended 30.06.2011

`/Crores `/Crores

Capital 0.38 0.03Add: Intangible assets under development 6.19 -

6.57 0.03Revenue (Depreciation, Personnel, Travel and Other 9.92 5.37Administration expenses)Less: Transferred to Intangible assets under development 6.19 -

3.73 5.37TOTAL 10.30 5.40

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36. Information in respect of purchase of traded goods:

Value`/Crores

Computers/Micro processor based systems 130.47(120.10)

Photocopiers/Electronic Equipments 158.51(211.86)

Printers/Scanners/UPS/CVT 200.04(217.10)

Cellular Phones 6431.10(6163.06)

EPABX Systems 53.53(46.78)

Others* 643.94(837.61)

7617.59TOTAL (7596.51)

* Does not include any class of goods which in value individually accounts for 10% or more of the total value of purchase oftraded goods.

37. Stocks and Sales:

Class of Products Sales/Adjustments Opening Stock Closing Stock Value# Value Value

`/Crores `/Crores `/CroresComputers/Micro processor based systems 1322.90 71.86 73.82

(1577.25) (58.06) (71.86)Photocopiers/Electronic Equipments 176.57 40.89 34.76

(258.58) (32.82) (40.90)Printers/Scanners/UPS/CVT 216.36 18.11 15.96

(207.38) (14.14) (18.11)Cellular Phones 6405.98 140.80 191.44

(6433.53) (250.11) (140.81)EPABX Systems 61.18 7.52 7.38

(83.22) (18.88) (7.52)Others* 1498.61 80.08 73.13

(1851.41) (217.51) (80.06)TOTAL 9681.60 359.26 396.49

(10411.37) (591.52) (359.26)

# Except trade discount, no other discount has been adjusted.* Does not include any class of goods which in value individually accounts for 10% or more of the total value of sales/stock.Note: Previous year’s figures are given in brackets.

38. Value of imported and indigenous raw materials and components consumed during the year (excluding value of consumptionof stores and spares which is not readily ascertainable) classified on the basis of ratio between purchase of imported andindigenous raw materials and components during the year:

Year ended 30.06.2012 Year ended 30.06.2011 `/Crores % of `/Crores % of

Consumption Consumption Imported 1065.94 84% 1398.84 86% Indigenous 207.35 16% 227.73 14%

TOTAL 1273.29 100% 1626.57 100%

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39- Details of raw materials and components consumed (in value):Year ended 30.06.2012 Year ended 30.06.2011

`/Crores `/Crores

Mother Boards and Assemblies 124.02 495.06Hard Disk Drives 133.52 120.52Processors 246.50 283.65Monitors 152.46 182.30CRT Key Tops PCBs and Cabinets 41.45 12.96Networking Products 250.00 318.05Others* 325.34 214.03

TOTAL 1273.29 1626.57

* Does not include any class of goods which in value individually accounts for 10% or more of the total value of raw materialsconsumed.

40- Value of Imports calculated on CIF basis:Year ended 30.06.2012 Year ended 30.06.2011

`/Crores `/Crores

a) Raw materials and components 1114.22 1326.56b) Stores and spares 29.37 42.19c) Capital goods 0.51 2.21d) Traded items 382.53 486.26

TOTAL 1526.63 1857.22

41- Expenditure in Foreign Currency:(On accrual basis)


a) Travel 3.30 1.36b) Royalty* 87.18 113.09c) Interest on Acceptances 5.51 9.59d) Technical Fee 0.58 0.46e) Others (includes consultancy, certification charges, license) 3.93 1.91

TOTAL 100.50 126.41

* Gross of tax deducted at source.

42- Earnings in Foreign Currency:Year ended 30.06.2012 Year ended 30.06.2011

`/Crores `/Crores

a) Commission 0.25 6.11b) FOB value of exports (including deemed exports) 39.31 9.79c) Others (including reimbursement of expenses) 31.59 64.77

TOTAL 71.15 80.67

43- Remuneration to Auditor*:Year ended 30.06.2012 Year ended 30.06.2011

`/Crores `/Crores

a) Statutory Audit 1.40 1.40b) Other Audit Services/Certifications 0.54 0.31c) Others - 0.09d) Out-of-Pocket Expenses 0.10 0.08

TOTAL 2.04 1.88

* Excluding service tax.

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44- Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, fora total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. Theseoptions vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercisedwith in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option of ` 10/- confers on the employee a right to five equity shares of ` 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase SchemeGuidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”).

Details of Grants made under Employee Stock Option Scheme 2000

Date of Exercise price Options Options Options Options Options Options OptionsGrant of the option outstanding granted forfeited exercised expired outstanding exercisable

for five equity at the during during during during at the end at the endshares of beginning the year the year the year the year of the of the` 2/- each of the year year year

28-Jan-04 538.15 128965 - - - 13603 115362 115362(175400) (-) (-) (92) (46343) (128965) (128965)

25-Aug-04 603.95 36984 - - - 13735 23249 23249(46978) (-) (-) (-) (9994) (36984) (36984)

18-Jan-05 809.85 121428 - - - 48424 73004 73004(168082) (-) (-) (-) (46654) (121428) (121428)

15-Feb-05 809.30 - - - - - - -(-) (-) (-) (-) (-) (-) (-)

15-Mar-05 834.40 18263 - - - 7435 10828 10828(24298) (-) (-) (-) (6035) (18263) (18263)

15-Apr-05 789.85 3332 - - - 2452 880 880(4760) (-) (-) (-) (1428) (3332) (3332)

14-May-05 770.15 3655 - - - 2475 1180 1180(4540) (-) (-) (-) (885) (3655) (3655)

15-Jun-05 756.15 675 - - - - 675 675 (675) (-) (-) (-) (-) (675) (675)

15-Jul-05 978.75 10480 - - - 9584 896 896(11722) (-) (-) (-) (1242) (10480) (10480)

13-Aug-05 1144.00 16030 - - - 5929 10101 10101(17630) (-) (-) (-) (1600) (16030) (16030)

15-Sep-05 1271.25 9140 - - - 3862 5278 5278(9140) (-) (-) (-) (-) (9140) (9140)

15-Mar-07 648.75 136700 - - - - 136700 136700(136700) (-) (-) (-) (-) (136700) (136700)

23-Jan-08 898.25 52395 - - - 10995 41400 41400(61125) (-) (3060) (-) (5670) (52395) (32078)

18-Aug-09 627.25 20000 - - - - 20000 12000(20000) (-) (-) (-) (-) (20000) (6000)

26-Oct-10 586.75 80000 - - - - 80000 24000(-) (80000) (-) (-) (-) (80000) (-)

2-Feb-11 516.50 12000 - - - - 12000 3600(-) (12000) (-) (-) (-) (12000) (-)

30-Jan-12 233.25 - 16000 - - - 16000 -(-) (-) (-) (-) (-) (-) (-)

18-Jun-12 202.00 - 12000 - - - 12000 -(-) (-) (-) (-) (-) (-) (-)

Total 650047 28000 - - 118494 559553 459153(681050) (92000) (3060) (92) (119851) (650047) (523730)

Note: Previous year’s figures are given in brackets.

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Details of Grants made under Employee Stock Based Compensation Plan 2005



13-Aug-05 1144.00 1738150 - - - 495540 1242610 1242610(1877002) (-) (1430) (-) (137422) (1738150) (1738150)

19-Oct-05 1157.50 35260 - - - 9660 25600 25600(42090) (-) (480) (-) (6350) (35260) (35260)

15-Nov-05 1267.75 16000 - - - 4160 11840 11840(16800) (-) (-) (-) (800) (16000) (16000)

15-Dec-05 1348.25 10700 - - - 3740 6960 6960(13290) (-) (190) (-) (2400) (10700) (10700)

14-Jan-06 1300.00 8740 - - - 1876 6864 6864(10130) (-) (278) (-) (1112) (8740) (8740)

15-Feb-06 1308.00 3240 - - - 648 2592 2592(4040) (-) (120) (-) (680) (3240) (3240)

16-Mar-06 1031.00 12350 - - - 4790 7560 7560(17280) (-) (650) (-) (4280) (12350) (12350)

17-Apr-06 868.75 3900 - - - 1580 2320 2320(6900) (-) (600) (-) (2400) (3900) (3900)

15-May-06 842.50 7850 - - - 1570 6280 6280(14250) (-) (750) (-) (5650) (7850) (7850)

15-Jun-06 620.50 10330 - - - 2450 7880 7880(13950) (-) (460) (-) (3160) (10330) (10330)

17-Jul-06 673.75 10302 - - - 3562 6740 6740(17240) (-) (1578) (-) (5360) (10302) (8504)

15-Mar-07 648.75 341080 - 5580 - 31480 304020 304020(366760) (-) (8380) (-) (17300) (341080) (274100)

23-Jan-08 898.25 146670 - 9690 - 18810 118170 95820(178665) (-) (16650) (-) (15345) (146670) (89550)

16-Aug-11 375.00 - 30000 - - - 30000 -(-) (-) (-) (-) (-) (-) (-)

17-Aug-11 375.00 - 7000 - - - 7000 -(-) (-) (-) (-) (-) (-) (-)

18-Jun-12 202.00 - 4000 - - - 4000 -(-) (-) (-) (-) (-) (-) (-)

Total 2344572 41000 15270 - 579866 1790436 1727086(2578397) (-) (31566) (-) (202259) (2344572) (2218674)


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Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock Based CompensationPlan 2005 as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs aregiven as under:

Employee Stock Option Employee StockScheme 2000 Based Compensation Plan 2005

Volatility 31% to 68% 31% to 65%Risk free rate 4.57% to 8.24% 6.49% to 8.34%Exercise Price ` 202.00 to ` 1,271.25 ` 202.00 to ` 1,348.25Time to Maturity (years) 2.20 to 5.50 2.50 to 7.00Dividend Yield 9% to 31% 10% to 36%Life of options 8.5 Years 10 YearsFair Value of options as ` 1.29 to ` 203.14 ` 1.37 to ` 262.97at the grant date

Notes:1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for


The impact on the profit of the Company for the year ended June 30, 2012 and the basic and diluted earnings per share hadthe Company followed the fair value method of accounting for stock options is set out below:

Proforma Disclosures

2012 2011`/Crores `/Crores

Profit after tax as per Statement of Profit and Loss (a) 47.86 177.23Add: Employee Stock Compensation Expense as per Intrinsic Value Method - -Less: Employee Stock Compensation Expense as per Fair Value Method[Net of amount attributable to employees of subsidiary ` 0.00 Crores (2011 - ` 0.02 Crores)] 0.39 0.70Profit after tax recomputed for recognition of employee stock compensation expense under 47.47 176.53fair value method (b)*Earning Per Share based on earnings as per (a) above:(Refer Note 46)

- Basic ` 2.15 ` 8.08- Diluted ` 2.15 ` 8.08

Earning Per Share had fair value method been employed for accounting ofemployee stock options:

- Basic ` 2.13 ` 8.05- Diluted ` 2.13 ` 8.05

* Excludes impact on tax expense of employee stock compensation expense.

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45- Leases:

a) Finance Leases:

As Lessor:

(i) The Company has given on finance lease certain assets/inventories which comprise of computers, radio terminalsand office equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are noexceptional/restrictive covenants in the lease agreements.

(ii) The gross investment in the assets given on finance leases as at June 30, 2012 and its present value as at that dateare as follows:

Total minimum Interest included in Present value oflease minimum lease minimum lease

receivable receivable receivable`/Crores `/Crores `/Crores

Not later than one year 96.73 28.28 68.45(18.79) (4.81) (13.98)

Later than one year and not later than five years 342.25 51.93 290.32(107.59) (10.31) (97.28)

Later than five years 2.62 0.15 2.47(5.45) (0.24) (5.21)

Total 441.60 80.36 361.24(131.83) (15.36) (116.47)


b) Sale and Leaseback and further sub-lease on finance lease basis

(i) The Company has entered into transaction of sale and leaseback on finance lease basis and further sub-lease onfinance lease basis for certain assets/inventories which comprise of computer systems and other related products.These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenantsin these lease agreements.

(ii) Details of minimum lease payments and minimum sub-lease receivables as at June 30, 2012 and its present valueas at that date are as follows:

Payable on sale and leaseback Receivable on Sub-lease

Total minimum Interest included Present value of Total minimum Interest included Present value oflease payable in minimum minimum lease lease receivable in minimum minimum lease

lease payable payable lease receivable receivable`/Crores `/Crores `/Crores `/Crores `/Crores `/Crores

Not later than one year 22.90 5.33 17.57 22.52 4.47 18.05(22.91) (6.84) (16.07) (18.63) (6.02) (12.62)

Later than one year and 44.23 6.49 37.74 48.51 5.36 43.15not later than five years (67.15) (11.73) (55.42) (66.13) (9.85) (56.28)Total 67.13 11.82 55.31 71.03 9.83 61.20

(90.06) (18.57) (71.49) (84.76) (15.86) (68.90)



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c) Sale and Leaseback

As Lessee:Total minimum Interest included in Present value of

lease minimum lease minimum leasepayable payable payable`/Crores `/Crores `/Crores



Total 16.87 2.84 14.03(20.32) (4.38) (15.94)

d) Cancelable Operating Leases

As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leasesare normally renewable on expiry.

(ii) The rental expense in respect of operating leases is ` 25.53 Crores (2011 - ` 24.94 Crores) which is disclosed as Rentexpense under 'Other expenses'.

As Lessor:

The gross block, accumulated depreciation and depreciation expense in respect of building and office automationproducts i.e. photocopying machines given on operating lease are as below:


Gross Block 57.66 41.42Accumulated Depreciation 17.85 11.79Net Block 39.81 29.63Depreciation Expense 5.96 4.38

e) Non-Cancelable Operating Leases

As Lessee:

(i) The Company has taken computers and furniture and fixtures on non-cancelable operating leases the futureminimum lease payments in respect of which are:


Not later than one year 0.15 1.92Later than one year and not later than five years - 1.73

Total 0.15 3.65

(ii) Minimum lease payments in respect of assets taken on lease recognised as an expense in the Statement of Profitand Loss for the year ended June 30, 2012 are ` 2.23 Crores (2011 - ` 2.47 Crores) which is included in Purchase ofServices under 'Other direct expenses'.

46- Earnings per share (EPS)

The earnings considered in ascertaining the Company’s EPS represent profit for the year after tax. Basic EPS is computed anddisclosed using the weighted average number of equity shares outstanding during the year. Diluted EPS is computed anddisclosed using the weighted average number of equity and dilutive equivalent shares outstanding during the year exceptwhen results would be anti-dilutive.

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Calculation of EPS:

Particulars 2012 2011

Profit after tax (`/Crores) 47.86 177.23Weighted average number of shares considered as outstanding in 222,879,629 219,350,542computation of Basic EPSAdd: Dilutive impact of stock options

- Issued for no consideration 246 152Weighted average number of shares outstanding in computation of Diluted EPS 222,879,875 219,350,694Basic EPS (of ` 2/- each) ` 2.15 ` 8.08Diluted EPS (of ` 2/- each) ` 2.15 ` 8.08

47- Segment Reporting

The Company recognises the following segments as its primary segments.

a) The operations of Computer Systems and Other Related Products and Services consists of manufacturing of computerhardware systems, providing comprehensive Systems Integration, Roll out and Infrastructure management solutions indifferent Industry verticals, providing IT services including maintenance and facility management and ICT training.

b) The businesses of Telecommunication and Office Automation comprise of distribution of telecommunication and otherdigital lifestyle products, office automation products and related comprehensive maintenance and allied services andHomeland Security and Surveillance.

Secondary segmental reporting is based on the geographical location of the customers. Details of secondary segmentsare not disclosed as more than 90% of the Company’s revenues, results and assets relate to the domestic market.

Segment wise performance for the year ended June 30, 2012 `/ Crores

Primary Segments Computer Systems Telecommunication Inter-segment Totaland Other Related and Office Elimination

Products and AutomationServices

(i) RevenueExternal Revenue 3076.78 7298.70 10375.48

(3447.67) (7611.47) (11059.14)Inter-segment Revenue 7.98 -7.98

(-) (-)Total Gross Revenue 3076.78 7306.68 -7.98 10375.48

(3447.67) (7611.47) (-) (11059.14)Less: Excise Duty 86.20 86.20

(122.19) (122.19)Total Net Revenue 2990.58 7306.68 -7.98 10289.28

(3325.48) (7611.47) (-) (10936.95)(ii) Results -11.94 158.03 146.09

(112.45) (198.01) (310.46)Less: Unallocable Expenditure 85.40

(56.30)Operating Profit 60.69

(254.16)Add: Other Income (Excluding Operational Income) 80.94

(56.91)Less: Finance Charges 80.09

(73.97)Profit Before Tax 61.54

(237.10)Less: Tax Expense 13.68

(59.87)Profit After Tax 47.86

(177.23)

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Primary Computer Systems Telecommunication Inter-segment TotalSegments and Other Related and Office Elimination

Products and AutomationServices

(iii) Segment Assets 2923.12 804.55 3727.67(2789.68) (752.07) (3541.75)

Unallocated Corporate Assetsa) Liquid Assets 438.39

(607.62)b) Others 701.14

(416.50)

Total Assets 4867.20(4565.87)

(iv) Segment Liabilities 1855.44 428.13 2283.57(1483.37) (466.20) (1949.57)

Unallocated Corporate Liabilities 666.47(669.26)

Total Liabilities 2950.04(2618.83)

(v) Capital Expenditure 46.74 19.73 66.47(65.29) (27.36) (92.65)

(vi) Depreciation 32.08 9.56 41.64(24.35) (6.88) (31.23)

(vii) Other Non Cash Expenses 62.71 8.19 70.90(25.25) (7.49) (32.74)

Note: Previous year’s figures are given in brackets.Segment Results include ` 17.01 Crores (2011- ` 17.17 Crores) of certain Operating other income which is included in‘Other income’ in the Statement of Profit and Loss.

48- The Company has calculated the various benefits provided to employees as under:

(a) Defined Contribution(i) Superannuation Fund

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss:


Employers Contribution to Superannuation Fund* 2.11 1.61

(b) State Plans(i) Employee State Insurance

(ii) Employee’s Pension Scheme 1995

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss:


Employers contribution to Employee State Insurance* 3.82 4.04Employers contribution to Employee’s Pension Scheme 1995* 7.93 6.96

* Included in Contribution to Provident and Other Funds under Employee benefit expense (Refer Note 26).

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(c) Defined Benefit

(i) Gratuity

(ii) Provident Fund#

In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in the respect ofthe aforesaid defined benefit plan based on the following assumptions:

Gratuity Provident Fund

2012 2011 2012 2011

Discount rate (per annum) 8.60% 8.00% 8.50% 8.50%Rate of increase in compensation levels 7.00% 7.00% Not Applicable Not ApplicableRate of return on plan assets Not Applicable Not Applicable Not Applicable Not ApplicableExpected statutory interest rate Not Applicable Not Applicable 8.50% 8.50%Expected short fall in interest earnings Not Applicable Not Applicable 0.05% 0.05%Expected average remaining working lives 24.34 24.35 24.34 24.35of employees (years)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority,promotion and other relevant factors such as supply and demand in the employment market.

`/Crores

2012 2011

Gratuity Provident Gratuity ProvidentFund Fund

Reconciliation of opening and closing balancesof the present value of the definedbenefit obligation:Present value of obligation at the beginningof the year 19.96 123.64 16.98 102.41Current service cost 2.31 6.97 2.08 5.60Past service cost - - - -Interest cost 1.69 10.51 1.34 8.71Actuarial (gain)/loss (0.56) (1.78) 0.84 1.37Benefits (paid) (3.30) (17.54) (1.28) (10.54)Settlements/transfer in - 1.48 - 1.66Contribution by plan participants - 17.31 - 14.43Present value of obligation at the end of the year 20.10 140.59 19.96 123.64

`/Crores

2012 2011

Provident ProvidentFund Fund

Reconciliation of opening and closing balancesof the fair value of the plan assets:Fair value of plan assets at the begining of the year 122.64 102.25Expected Return on plan Assets 10.42 8.69Employer Contribution 6.97 5.60Settlements/Transfer in 1.48 1.66Employee Contribution 17.31 14.43Benefits paid (17.54) (10.55)Acluarial gain/(loss) of Plan Assets 0.58 0.56Fair value of plan assets at the end of the year 141.86 122.64

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`/Crores

2012 2011

Cost recognised for the year (included Gratuity Provident Gratuity Providentunder Salaries, Wages, Bonus and Gratuity): Fund Fund

Current service cost 2.31 - 2.08 -Company contribution to Provident Fund - 6.97 - 5.60Past service cost - - - -Interest cost 1.69 - 1.34 -Actuarial (gain)/loss (0.56) - 0.84 -Interest guarantee liability - - - 0.17Shortfall in fund - - - 0.83Net cost recognised for the year* 3.44 6.97 4.26 6.60

* Included in Salaries, Wages, Bonus and Gratuity for Gratuity and Contribution to Provident and Other Fund underEmployee benefits expense (Refer Note 26).

Reconciliation of the present value of the defined benefit obligation and the fair value of the plan assets:`/Crores

Gratuity

2012 2011 2010 2009 2008

Present value of the obligation as at the end of the year 20.10 19.96 16.98 14.90 12.20Fair value of plan assets at the end of the year - - - - -Assets/(Liabilities) recognised in the Balance Sheet (20.10) (19.96) (16.98) (14.90) (12.20)

Provident Fund

2012 2011

Present value of the obligation as at the end of the year (140.59) (123.64)Fair value of plan assets at the end of the year 141.86 122.64Assets/(Liabilities) recognised in the Balance Sheet -** (1.00)

**As there is surplus, the same has not been recognised in Balance Sheet.# In the absence of the relevant information from the Actuary, the above details do not include the composition of

Plan assets.

49- The Company remits the dividends to its non resident shareholders in Indian Rupees.


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50- Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations, 2009, the Company has

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at ` 152.90 per warrant to certain promoterson a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal numberof equity shares of ̀ 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscriptionmoney.

(b) Raised ` 472.67 Crores by allotment of 3,05,55,713 equity shares of ` 2/- each at a price of ` 154.69 per equity shareincluding a premium of ` 152.69 per equity share through Qualified Institutional Placement on October 21, 2009.

The funds raised through above issues have been utilised as under:

Particulars As at June 30, 2012 As at June 30, 2011(`/Crores) (`/Crores)

Gross Proceeds- Preferential Issue 322.00 322.00- Qualified Institutions Placement 472.67 472.67

Less: Share Expenses incurred adjusted with SecuritiesPremium Account during the year (14.55) (14.55)Net Proceeds 780.12 780.12Utilisation towards

- Capital expenditure 87.46 73.34- Acquisition 27.51 25.30- Working Capital 300.00 303.10

Total Utilisation 414.97 401.74UnutilisedCurrently held in Unquoted (Others)Current Investments 365.15 378.38Total Unutilised 365.15 378.38

51- (a) Subsequent to the year end, the Shareholders of the Company by way of postal ballot have given their approval underSection 293(1)(a) of the Companies Act, 1956 for transfer of the Company’s Computing Products Manufacturing andChannel Business as a going concern on slump sale basis, effective on such date as the Board deems fit for the Company,to a wholly owned subsidiary/group/affiliate/other entity either at book value or for such lump sum consideration beingnot less than the book values.

(b) The Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore has on August 7, 2012 acquiredthe remaining 40% equity stake with effect from January 1, 2012 in HCL Infosystems MEA FZCO. Consequently, HCLInfosystems MEA FZCO, with effect from January 1, 2012, has become a wholly owned subsidiary of HCL Insys Pte.Limited, Singapore.

(c) On June 29, 2012, the Company has acquired content for the K-12 education segment from ‘Attano Media and EducationPrivate Limited’ at a negotiated consideration.

(d) HCL Touch Inc., USA, was Incorporated as a wholly owned subsidiary on August 29, 2011.

(e) Pursuant to Share Purchase Agreement (SPA) dated January 11, 2011, read with addendum to SPA dated August 26,2011, the Company with effect from October 31, 2011 has sold its entire equity stake in HCL Infinet Limited, the whollyowned subsidiary.

This transaction has resulted into a loss of ` 11.37 Crores, out of which ` 7.86 Crores had already been provided againstloans/ investment till June 30, 2011 and the balance loss of ` 3.51 Crores has been accounted for in the current year.

(f ) During the year, the Company has with effect from August 1, 2011, transferred its Digital Entertainment business as agoing concern basis to Digilife Distribution and Marketing Services Limited, the wholly owned subsidiary for aconsideration of ` 35 Crores, and acquired the Security and Surveillance business of Digilife Distribution and MarketingServices Limited as a going concern on slump sale basis for a consideration of ` 6 Crores.

(g) Techmart Telecom Distribution FZCO, Dubai, in which a subsidiary of the Company has 20% stake, is being dissolved.

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52- Contract-in-progress As at June 30, 2012 As at June 30, 2011(`/Crores) (`/Crores)

Contract revenue recognised for the period 342.60 404.10

Aggregate amount of contract costs incurred and recognised 2943.00 2600.40profits (less recognised losses) for all contracts in progressupto the period ended

The amount of advances received 93.35 76.56

Gross amount due from customers for contract-in-progress 1075.87 948.46

Gross amount due to customers for contract-in-progress 84.33 79.81

53- Pursuant of clause ix (b) of section 227 (4A) of the Companies Act, 1956, the details of disputed dues are as follows:

SL. Name of the Statute Nature of the dues Amount Amount Period to which Forum where disputeNo. (`/crores) Deposited the amount is pending

(`/crores) relates

1.1 Uttar Pradesh Trade Tax Act, 1948** Sales Tax* 0.52 0.13 2002-2003 Commercial Tax Tribunal, Noida.1.2 Sales Tax* 0.07 0.07 2002-2003 High Court, Allahabad.1.3 Sales Tax* 0.36 0.36 2003-2004 Commercial Tax Tribunal, Noida.1.4 Sales Tax* 1.44 0.67 2004-2005 Joint Commissioner (Appeals) of

Commercial Tax, Noida.1.5 Sales Tax* 2.15 1.30 2005-2006 Joint Commissioner (Appeals) of

Commercial Tax, Noida.1.6 Sales Tax* 1.62 0.34 2006-2007 Additional Commissioner

(Appeals) of Commercial Tax, Noida.1.7 Sales Tax* 2.76 1.46 2006-2007 Joint Commissioner (Appeals) of

Commercial Tax Noida.1.8 Sales Tax* 5.28 0.61 2007-2008 Additional Commissioner

(Appeals) of Commercial Tax Noida.1.9 Sales Tax(including Penalty)* 0.11 0.20 2007-2008 Joint Commissioner (Appeals) of

Commercial Tax Noida.1.10 Sales Tax* 0.50 0.03 2008-2009 Additional Commissioner(Appeals)

of Commercial Tax Noida.1.11 Commercial Tax (including Penalty)* 0.08 0.08 2008-2009 Joint Commissioner (Appeals) of

Commercial Tax Noida.1.12 Commercial Tax (including Penalty)* - 0.09 2009-2010 Joint Commissioner (Appeals) of

Commercial Tax Noida.1.13 Commercial Tax (including Penalty)* 0.24 0.24 2011-2012 Joint Commissioner (Appeals) of

Commercial Tax Noida.2.1 Delhi Sales Tax Act, 1975** Sales Tax* 0.04 0.03 2003-2004 Joint Commissioner (Appeals) of

Sales Tax, Delhi.2.2 Sales Tax 0.04 - 2004-2005 Joint Commissioner (Appeals) of

Sales Tax, Delhi.3.1 Delhi Value Added Tax Act, 2004** Trade Tax 0.17 - 2005-2006 Additional Commissioner of Sales

Tax, Delhi.3.2 Trade Tax* 1.15 0.08 2007-2008 Deputy Commissioner (Appeals) of

Sales Tax Delhi.3.3 Trade Tax 0.76 - 2008-2009 Deputy Commissioner (Appeals) of

Sales Tax Delhi.4.1 Tamil Nadu General Sales Tax Act, 1959**Sales Tax* - 0.05 2003-2004 Commercial Tax Officer, Chennai.4.2 Sales Tax 0.13 - 2004-2005 Commercial Tax Officer, Chennai4.3 Sales Tax* 0.29 0.05 2005-2006 Commercial Tax Officer, Chennai.4.4 Sales Tax 0.33 - 2006-2007 Deputy Commissioner (Appeals)

Sales Tax, Chennai.4.5 Sales Tax* 0.88 0.42 2007-2008 Commercial Tax Officer, Chennai.4.6 Sales Tax* 1.01 0.45 2008-2009 Commercial Tax Officer, Chennai.5.1 West Bengal Sales Tax Act, 1994** Sales Tax 0.02 - 2005-2006 Joint Commissioner (Appeals) of

Sales Tax, Kolkata.5.2 Sales Tax 0.63 - 2006-2007 Joint Commissioner (Appeals) of



Sales Tax, Kolkata.6.1 Rajasthan Sales Tax Act, 1994** Sales Tax* 0.02 0.01 1998-1999; Deputy Commissioner (Appeals) of

2000-2001; Sales Tax, Jaipur.2001-2002;2003-2004

6.2 Sales Tax 0.02 - 2004-2005;2005-2006 Deputy Commissioner (Appeals) of

Sales Tax, Jaipur.


Contd...

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7.1 Rajasthan Value Added Tax Act, 2003** Commercial Tax 0.16 - 2006-2007 Deputy Commissioner (Appeals) 2007-2008 of Commercial Tax, Jaipur.

8.1 Kerala General Sales Tax Act, 1963** Sales Tax* 0.27 0.15 2001-2002 Tribunals of Sales Tax, Kochi.8.2 Sales Tax* 0.52 0.33 2002-2003; Deputy Commissioner (Appeals) of

2003-2004; Sales Tax, Kochi.2004-2005

8.3 Sales Tax (including Penalty)* 0.29 0.07 2007-2008; Check post authorities, Kerala.2008-2009;2009-2010;2010-2011;2011-2012

9.1 Uttarakhand Value Added Tax Sales Tax 3.60 - 2006-2007 Deputy Commissioner CommercialAct, 2005 ** Tax, Dehradun.

Sales Tax (including Penalty)* 0.70 0.12 2007-2008 Joint Commissioner Commercial2008-2009 Tax, Dehradun.

Sales Tax* 8.68 1.36 2007-2008 Joint Commissioner Commercial.2008-2009 Tax, Dehradun.

10.1 Jammu & Kashmir Value Added tax Sales Tax (including Penalty)* 2.75 0.08 2007-2008 Deputy Commissioner (Appeals),Act, 2005** 2008-2009 Jammu.

11.1 Punjab General Sales Tax Act, 1948** Sales Tax (including Penalty) 0.06 - 2004-2005 High Court Chandigarh & Punjab.12.1 Punjab Value Added Tax Act, 2005** Sales Tax (including Penalty)* 0.50 0.45 2007-2008 Tribunal Chandigarh.12.2 Sales Tax (including Penalty)* 0.22 0.05 2008-2009 Tribunal Chandigarh.13.1 Andhra Pradesh Value Added Sales Tax* 0.25 0.14 2005-2006 Commissioner (Appeals) of

Tax Act, 2005** 2006-2007 Commercial Tax, Hyderabad.13.2 Sales Tax* 0.00 0.10 2007-2008 Commissioner (Appeals) of

Commercial Tax, Hyderabad.14.1 Karnataka Value Added Tax Act,2003.** Sales Tax* 0.47 - 2006-2007 Assessing Officer, Bangalore.14.2 Sales Tax* 1.16 0.98 2005-2006 Deputy Commissioner Appeal,

2006-2007 Bangalore.14.3 Sales Tax* 0.50 0.25 2007-2008 Joint Commissioner Appeal,

Bangalore.14.4 Sales Tax* 2.96 1.35 2008--2009 Deputy Commissioner, Bangalore.

2011-2012

Sub Total (a) 44.89 12.10

15.1 Central Excise Act, 1944 Excise Duty (including Penalty) 0.95 - 2002-2003; Central Excise & Service Tax.2003-2004 Appellate Tribunal, Chennai.

15.2 Excise Duty 0.08 0.04 July to Commissioner (Appeals),December, 2006 Chennai.

15.3 Excise Duty (including Penalty) 0.04 - January 2007 to Commissioner (Appeals), Chennai.March 2007

15.4 Excise Duty (including Penalty) 0.04 - April 2007 to Commissioner (Appeals), Chennai.July 2007

15.5 Excise Duty (including Penalty) 0.04 - April 2008 to Commissioner (Appeals), Chennai.December 2008

15.6 Excise Duty (including Penalty) 0.06 - September 2007 Central Excise & Service Tax.to March 2008 Appellate Tribunal, Chennai.

15.7 Excise Duty (including Penalty) 1.62 - January 2010 Commissioner (Appeals).15.8 Excise Duty (Including Penalty) 0.01 - December 2010 Commissioner (Appeals).15.9 Excise Duty (Including Penalty) 3.24 0.60 1980-1981; Central Excise & Service Tax

1981-1982; Appellate Tribunal, Delhi.1982-1983;1983-1984

15.10 Excise Duty (Including Penalty) 1.03 0.00 July 2003 to Central Excise & Service TaxSeptember 2005 Appellate Tribunal, Chennai.

15.11 Excise Duty (Including Penalty) 1.63 0.00 July 2003 to Central Excise & Service TaxMarch 2006 Appellate Tribunal, Chennai.

15.12 Excise Duty (Including Penalty) 0.34 - September 2005 Commissioner (Appeals), Chennai.to September 2006

15.13 Excise Duty (Including Penalty) 0.34 - September 2005 Commissioner (Appeals), Chennai.to September 2006

15.14 Excise Duty (Including Penalty) 0.13 - January to Commissioner (Appeals), Chennai.June 2007

15.15 Wrong availment of Input 0.06 - January to Commissioner (Appeals), Chennai.credit - Service Tax June 2007

15.16 Excise Duty (Including Penalty) 0.02 - July 2008 Commissioner (Appeals), Mumbai.

Sub Total (b)# 9.63 0.64


(`/crores) relates

Contd...

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16.1 Income Tax Act, 1961 Income Tax (Representative Assessee) 0.37 - 1989-1990 High Court, Delhi.16.2 Income Tax (Representative Assessee) 0.16 0.16 1990-1991 High Court, Delhi.16.3 Income Tax (Regular Assessment of 0.87 - 2005-2006 Commissioner (Appeals), Delhi.

erstwhile HCL Infinet Limited )16.4 Income Tax (Regular Assessment of 1.54 - 2006-2007 Commissioner (Appeals), Delhi.

erstwhile HCL Infinet Limited )16.5 Income Tax (Representative Assessee) 0.27 - 2007-2008 Commissioner (Appeals), Delhi.16.6 Income Tax (Representative Assessee) 0.74 0.72 2008-2009 Commissioner (Appeals), Delhi.

Sub Total (c) 3.95 0.88Total (a) + (b) + (c) 58.47 13.62

Notes: 1. * Deposits under sales tax are adjustable against demand of other assessment years.2. ** Including balances under Central Sales Tax Act, 1956 with relevant rules of respective states.3. # Excludes interest for which there is no demand on the Company.

54- Disclosure of related parties and related party transactions:a) Company having substantial interest:

HCL Corporation Private Limited (Formerly known as 'Guddu Investments (Pondi) Private Limited')b) List of parties where control exists/existed:

Wholly owned Subsidiaries:HCL Infinet Limited *HCL Infocom LimitedDigilife Distribution and Marketing Services LimitedRMA Software Park Private LimitedHCL Insys Pte. Limited, SingaporeHCL Investments Pte. Limited, SingaporeHCL Touch Inc., USAOthers Subsidiaries:Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited)HCL Infosystems MEA FZCO, Dubai (100% Shareholding of HCL Insys Pte. Limited) **HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZCO)HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZCO)HCL Infosystems Qatar, WLL (49% Shareholding of HCL Infosystems MEA FZCO)HCL Infosystems South Africa Pty. Limited (100% Shareholding of HCL Investments Pte. Limited)

* HCL Infinet Limited ceased to be a subsidiary with effect from October 31, 2011** 60% Shareholding till December 31, 2011

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:HCL Technologies LimitedHCL Comnet Systems and Services LimitedHCL BPO Services (NI) LimitedSSN College of EngineeringSSN Trust

d) Key Management PersonnelMr. Ajai Chowdhry (Resigned as Whole Time Director with effect from March 31, 2012)Mr. Harsh ChitaleMr. J.V. RamamurthyMr. Sandeep Kanwar

e) Summary of Related Party disclosuresNote: All transactions with related parties have been entered into in the normal course of business.


(`/crores) relates

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A. Transactions Company having Subsidiaries Others Key Management Totalsubstantial interest Personnel

Jun-12 Jun-11 Jun-12 Jun-11 Jun-12 Jun-11 Jun-12 Jun-11 Jun-12 Jun-11

Sales and Related Income 0.00 0.00 152.11 8.55 142.84 116.14 294.95 124.69- HCL Technologies Limited 130.05 106.67- HCL Infosystems MEA FZCO 21.97 6.76- Digilife Distribution and

Marketing Services Limited 129.81 -Services 0.01 0.01 2.79 0.82 11.10 9.26 13.90 10.09

- HCL Technologies Limited 7.94 8.02- HCL BPO Services (NI) Limited 2.20 0.20- HCL Infinet Limited 0.34 -- HCL Infosystems MEA FZCO 2.11 -

Purchase of Goods 286.44 94.15 286.44 94.15- Digilife Distribution and

Marketing Services Limited 21.77 31.33- HCL Insys Pte. Limited 264.66 62.82

Purchase of Services 0.78 5.44 6.11 3.92 6.89 9.36- HCL Infinet Limited 0.77 5.42- HCL Technologies Limited 6.11 2.77

Purchase of Investment 31.21 40.84 31.21 40.84- Pimpri Chinchwad eServices Limited - 0.05- HCL Investments Pte. Limited 1.47 5.83- HCL Insys Pte. Limited - 19.96- Digilife Distribution and

Marketing Services Limited 29.00 15.00- HCL Touch Inc. 0.74 -

Loans and Advances Refunded/Adjusted 30.17 29.53 30.17 29.53- HCL Infinet Limited 18.57 1.43- HCL Insys Pte. Limited - 11.10- Digilife Distribution and

Marketing Services Limited 11.60 17.00Loans and Advances Given 3.31 45.86 3.31 45.86

- HCL Infinet Limited - 9.00- Digilife Distribution and

Marketing Services Limited - 18.60- RMA Software Park Private Limited 3.31 7.16- HCL Insys Pte. Limited - 11.10

Assets Purchased 0.30 1.73 - 4.30 0.30 6.03- HCL Infinet Limited - 1.46- HCL Technologies Limited - 4.30- Digilife Distribution and

Marketing Services Limited 0.25 -- HCL Insys Pte. Limited 0.05 -

Remuneration 8.74 7.02 8.74 7.02- Mr. Ajai Chowdhry 3.14 3.32- Mr. Harsh Chitale 2.50 1.38- Mr. J.V. Ramamurthy 1.56 1.30- Mr. Sandeep Kanwar 1.54 1.02

Reimbursements towardsexpenditure

a) Received 0.09 0.02 2.10 1.02 0.50 0.02 2.69 1.06- HCL Infinet Limited 1.24 0.98- HCL Technologies Limited. 0.50 -- Digilife Distribution and

Marketing Services Limited 0.87 -b) Made 0.27 0.04 0.99 0.94 1.96 2.95 3.22 3.93

- HCL Infinet Limited 0.14 -- HCL Technologies Limited 1.92 2.95- HCL Infosystems MEA FZCO 0.84 -- Digilife Distribution and

Marketing Services Limited - 0.72 - -

B. Amount due to / from related partiesInvestments 117.82 98.30 117.82 98.30Trade Receivables 0.06 0.09 106.25 2.29 66.82 67.06 173.13 69.44Loans and Advances Recoverables 0.34 0.35 26.19 58.67 2.38 0.50 28.91 59.52Trade Payables 172.41 43.78 0.01 2.01 172.42 45.79

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55. Additional disclosure as per Clause 32 of the Listing Agreement:

Disclosure of amounts at the year end and the maximum amount of loans/advances/investments outstanding duringthe year ended June 30, 2012


A. Loans and Advances in the nature of Loans to Subsidiarya. Name RMA Software HCL HCL Digilife HCL RMA HCL HCL Digilife HCL

Park Private Insys Pte. Infocom Distribution Infinet Software Infsys Infocom Distribution InfinetLimited Limited Limited and Limited Park Pte. Limited and Limited

Marketing Private Limited MarketingService Limited Limited Service Limited

a. Balance outstanding at the year end 26.18 - 0.04 - - 22.87 - 0.03 11.60 18.57b. Maximum amount outstanding during

the year ended June 30, 2012 26.18 - 0.04 11.60 20.06 22.87 11.10 0.03 19.75 20.00

B. Loans and Advances in the nature of loans to Fellow Subsidiariesa. Name - -b. Balance outstanding at the year end Nil Nilc. Maximum amount outstanding during the year ended June 30, 2012 Nil Nil

C. Loans and Advances in the nature of Loans where there is no repayment schedulea. Name - -b. Balance outstanding at the year end Nil Nilc. Maximum amount outstanding during the year ended June 30, 2012 Nil Nil

D. Loans and Advances in the nature of loans where no interest or interestbelow Section 372A of Companies Act, 1956 is chargeda. Name RMA Software HCL HCL Digilife HCL RMA HCL HCL Digilife HCL

Park Private Insys Pte. Infocom Distribution Infinet Software insys Infocom Distribution InfinetLimited Limited Limited and Limited Park Pte. Limited and Limited

Marketing Private Limited MarketingService Limited Limited Service Limited

b. Balance outstanding at the year end 26.18 - 0.04 - - 22.87 - 0.03 11.60 18.57c. Maximum amount out standing during 26.18 - 0.04 11.60 20.06 22.87 11.10 0.03 19.75 20.00

the year ended June 30, 2012

Loans given to employees under various schemes of the Company have been considered to be out of purview of disclosurerequirement.

E. Loans and Advances in the nature of loans to firms/companies in which directors are interested Nil Nil

F. Disclosure of Investment in the Company’s own sharesa. Name of the Loanee - -b. Balance outstanding at the year end Nil Nilc. Maximum amount outstanding during the year ended June 30, 2012 Nil Nild. Investments made by the Loanee Nil Nile. Maximum amount of Investment during the year ended June 30, 2012 Nil Nil

56. a) Loss of ` 0.99 crores (2011 - Profit of ` 0.16 Crores) on sale of fixed assets has been adjusted against the Profit/Loss onsale of fixed assets.

b) Advertisement, Publicity and Entertainment expense, wherever on sharing basis, are shown at amounts borne by theCompany.

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57- a) Derivative Instruments outstanding at the Balance Sheet date:

The Company has following outstanding derivative as at reporting date:

Particulars Foreign Currency Average Rate Maximum Maturity PeriodValue / Crores

2012 2011 2012 2011 2012 2011

Forward Contracts to buy USD $8.18 $3.54 56.10 45.41 9 Months 3 MonthsOptions to hedge USD liability $0.80 - 55.93 - 13 Months -

The above derivatives have been undertaken to hedge the foreign currency exposures on Import/Royalty payables as atJune 30, 2012.

b) As on June 30, 2012, the foreign currency exposure that is not hedged by a derivative instrument or otherwise in respectof Trade Payable are ` 209.29 Crores (2011 - ` 316.77 Crores) and in respect of Trade Receivables are ` 38.80 Crores (2011- ` 13.05 Crores).

c) Mark-to-Market losses provided for as on June 30, 2012 of ` 0.27 Crores (2011 - ` Nil)

d) The unaccrued forward exchange cover as on June 30, 2012 of ` 7.06 Crores (2011 - ` 1.50 Crores) has been includedunder ‘Other current assets’ as ‘Unamortised Premium on Forwards Contracts’.

e) Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on December29, 2011, the Company has opted to accumulate the exchange difference arising on translation of foreign currency itemshaving a term of 12 months or more and amortise such exchange difference over the period of the item. Accordingly, aloss of ` 11.47 Crores (2011 - ` Nil) stands deferred as at June 30, 2012.

58- The financial statements for the year ended June 30, 2011 had been prepared as per the then applicable, pre-revised ScheduleVI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, thefinancial statements for the year ended June 30, 2012 are prepared as per Revised Schedule VI. Accordingly, the previousyear figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previousyear figures does not impact recognition and measurement principles followed for preparation of financial statements.




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Auditors' Report on the Consolidated Financial StatementsReport of the Auditors' to the Board of Directors of HCL Infosystems Limited on the Consolidated Financial Statements ofHCL Infosystems and its Subsidiaries.

Report of the Auditors' to the Board of Directors of HCL Infosystems Limited

1. We have audited the attached consolidated balance sheet of HCL Infosystems Limited (the "Company") and its subsidiariesand joint ventures of its subsidiaries, hereinafter referred to as the "Group" (refer Note 1 to the attached consolidated financialstatements) as at June 30, 2012, the related consolidated Statement of Profit and Loss and the consolidated Cash FlowStatement for the year ended on that date annexed thereto, which we have signed under reference to this report. Theseconsolidated financial statements are the responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. We did not audit the financial statements of five subsidiaries and their five step down subsidiaries and two jointly controlledentities of its subsidiaries included in the consolidated financial statements, which constitute total assets of ` 274.98 Croresand net assets of ` 111.07 Crores as at June 30, 2012, total revenue of ` 418.81 Crores, net profit of ` 2.91 Crores and net cashflows amounting to ` 36.58 Crores for the year then ended. The financial statements and other financial information havebeen audited by other auditors for eight subsidiaries and one jointly controlled entity of a subsidiary whose reports havebeen furnished to us, and two subsidiaries and one jointly controlled entity of a subsidiary have been certified by the respectivedirectors of these entities, and our opinion on the consolidated financial statements to the extent they have been derivedfrom such financial statements is based solely on the report of such other auditors and those management certified financialstatements.

4. We report that the consolidated financial statements have been prepared by the Company's Management in accordancewith the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements and Accounting Standard (AS)27 - Financial Reporting of Interests in Joint Ventures notified under sub-section 3C of Section 211 of the Companies Act,1956.

5. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the otherfinancial information of the components of the Group as referred to above, and to the best of our information and accordingto the explanations given to us, in our opinion, the attached consolidated financial statements give a true and fair view inconformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at June 30, 2012;

(b) in the case of the consolidated Statement of Profit and Loss, of the profit of the Group for the year ended on that date;and

(c) in the case of the consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.


Abhishek RaraPlace: Noida PartnerDate: August 24, 2012 Membership Number: 77779

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Notes As at 30.06.2012 As at 30.06.2011`/Crores `/Crores

Equity and Liabilities:

Shareholders' fundsShare capital 2, 3 44.58 44.58Reserves and surplus 3 1,866.53 1,911.11 1,862.64 1,907.22Minority interest - 4.00

Non-current liabilitiesLong-term borrowings 4 132.20 196.37Other long-term liabilities 5 148.83 58.58Long-term provisions 6 26.50 307.53 29.23 284.18

Current liabilitiesShort-term borrowings 7 492.41 391.10Trade payables 8 1,746.84 1,528.20Other current liabilities 9 550.44 513.65Short-term provisions 10 17.87 2,807.56 77.17 2,510.12

Total Equity and Liabilities 5,026.20 4,705.52

Assets:

Non-current assetsFixed assets- Tangible assets 11 267.44 269.51- Intangible assets 11 90.72 67.81- Capital work-in-progress 35.56 31.58- Intangible assets under development 10.52 -Deferred tax assets (net) 32 27.31 21.38Long-term loans and advances 13 64.88 50.80Trade receivables 14 22.81 21.68Other non-current assets 15 336.78 856.02 158.86 621.62

Current assetsCurrent investments 12 431.77 607.09Inventories 16 707.32 614.26Trade receivables 17 1,218.45 1,315.37Cash and bank balances 18 302.66 265.73Short-term loans and advances 19 293.37 285.39Other current assets 20 1,216.61 4,170.18 996.06 4,083.90

Total Assets 5,026.20 4,705.52

Consolidated Significant Accounting Policies 1

Consolidated Balance Sheet as at June 30, 2012

This is the Consolidated Balance Sheet The notes referred to above form an integral part of the Consolidatedreferred to in our report of even date Balance Sheet






91

Notes Year ended 30.06.2012 Year ended 30.06.2011`/Crores `/Crores

Revenue:

Revenue from operations (gross) 21 10,855.73 11,548.21Less: Excise Duty 86.20 10,769.53 122.19 11,426.02Other income 22 127.03 84.58

10,896.56 11,510.60Expenses:

Cost of materials consumed 1,368.28 1,626.57Purchases of stock-in-trade 7,936.81 7,981.60Changes in inventories of finished goods,work-in-progress and stock-in-trade 23 (58.45) 226.71Other direct expense 24 418.40 426.95Employee benefits expense 25 488.84 486.90Finance costs 26 84.62 79.38Depreciation and amortisation expense 11 46.06 38.36Other expenses 27 527.61 414.69

10,812.17 11,281.16

Profit before tax 84.39 229.44

Tax expenseCurrent tax 30.36 66.19Less: MAT Credit Entitlement (10.04) -

Current tax - For the year 20.32 66.19Current tax - For earlier years - 1.79Deferred tax 32 (5.93) 14.39 (7.87) 60.11

Profit for the year 70.00 169.33Minority Interest (2.07) 1.14

Profit after Minority Interest for the year 72.07 168.19

Earning per equity share (in `) 35Basic (of ` 2/- each) 3.23 7.67Diluted (of ` 2/- each) 3.23 7.67

Consolidated Significant Accounting Policies 1

Statement of Consolidated Profit & Loss for the year ended June 30, 2012

This is the Statement of Consolidated Profit The notes referred to above form an integral part of theand Loss referred to in our report of even date Statement of Consolidated Profit and Loss





92


1. Cash Flow from Operating Activities:

Profit before tax 84.39 229.44Adjustments for:

Depreciation and Amortisation Expense 46.06 38.36Finance Costs 84.62 79.38Interest Income (33.83) (22.99)Dividend Income (1.97) (28.91)Net (Profit)/Loss on Sale of Fixed Assets (1.96) 0.21Fixed Assets Written-Off 0.92 0.13Goodwill Written-Off 6.05 -Profit on Disposal of Unquoted (Others) Current Investments (41.09) (9.37)Gain on Sale of Subsidiary (25.55) -Provision for Doubtful Debts 63.40 36.36Provision for Doubtful Loans and Advances 1.31 -Provision for Doubtful Other Current Assets 0.83 0.41Provisions/Liabilities no longer required Written Back (17.77) (20.10)Provision for Gratuity and Other Employee Benefits 0.37 5.62Diminution in the Value of Unquoted/Quoted (0.20) 2.07(Others) Current InvestmentsUnrealised Foreign Exchange (Gain)/Loss 34.25 (3.97)Effect of Exchange Differences on Translation 9.55 (1.19)of SubsidiariesProvision for Warranty Liability 5.80 130.79 (0.99) 75.02

Operating profit before working capital changes 215.18 304.46

Adjustments for changes in working capital:- (Increase)/Decrease in Trade Receivables 22.44 (81.60)- (Increase)/Decrease in Loans and Advances (230.23) (115.83)

and Other Assets- (Increase)/Decrease in Inventories (93.06) 225.31- Increase/(Decrease) in Liabilities 325.09 24.24 (300.27) (272.39)

Cash generated from operations 239.42 32.07

- Taxes (Paid)/Received (Net of Tax Deducted at Source) (0.03) (45.12)

Net cash from operating activities (A) 239.39 (13.05)

2. Cash flow from Investing Activities:Purchase of Fixed Assets (including Intangible Assets) (69.68) (108.28)Capital Work-In-Progress (including Intangible (15.28) 0.85Assets under Development)Proceeds from Sale of Fixed Assets 5.95 3.09Proceeds from Sale of Current Investments 1,852.96 4,937.14Lease Rental Recoverable (236.99) (98.94)Purchase of Current Investments (1,639.02) (4,683.20)Investments in Bank Deposits (7.77) -(with original maturity of more than three months)Movement in Margin Money 1.09 (9.21)Interest Received 30.43 21.14Dividend Received on Current Investments 1.97 28.91Proceeds from Sale of Subsidiary 24.05 (52.29) - 91.50

Net cash from/(used in) investing activities (B) (52.29) 91.50

Consolidated Cash Flow Statement for the year ended June 30, 2012



93

Year ended 30.06.2012 Year ended 2011`/Crores `/Crores

3. Cash Flow from Financing Activities:Share Capital issued - 0.93Share Premium Received (Net) - 52.03Secured Loans

Short term paid (31.01) (2.59)Long term paid (33.83) (7.18)

Unsecured LoansShort term received 157.80 55.00Long term received - 79.35Long term paid (30.34) (16.87)

Interest Paid (90.04) (78.78)Dividend Paid (111.34) (174.88)Corporate Dividend Distribution Tax Paid (18.09) (156.85) (29.13) (122.12)Net Cash used in financing activities (C) (156.85) (122.12)Net Increase/(Decrease) in Cash andCash Equivalents (A+B+C) 30.25 (43.67)

Opening Balance of Cash and Cash Equivalents 255.24 298.91

Closing Balance of Cash and Cash Equivalents 285.49 255.24[Includes exchange rate fluctuation of ` 3.39 Crores(2011 - ` 0.08 Crores)]

Cash and cash equivalents comprise 285.49 255.24Cash, Cheques and Drafts (in hand) 76.37 61.14Balance with Banks on Current Accounts 199.47 188.60Balance with Banks on Deposits Accounts 9.65 5.50

Notes:1. The above Cash Flow Statement has been prepared under the indirect method set out in Accounting Standard-3, notified

u/s 211(3C) of Companies Act, 1956.2. Cash and cash equivalents include the following balances with banks which are not available for use by the

Company:

Year ended Year ended30.06.2012 30.06.2011

`/Crores `/CroresUnclaimed Dividend 3.90 3.79

3. Figures in brackets indicate cash outgo.

Consolidated Cash Flow Statement for the year ended June 30, 2012

This is the Consolidated Cash Flow Statementreferred to in our report of even date





94

1. CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES

a. GROUP COMPANIES

These consolidated financial statements comprise the financial statement of HCL Infosystems Limited (the ‘’Company’’),its subsidiaries and joint ventures (JV) (the ‘’Group’’), as given in the following table:

Name of the Subsidiary/ JV Country of Extent of Holding (%)Incorporation as at June 30

Subsidiary 2012 2011HCL Infinet Limited(Ceased to be a subsidiary with effect from India - 100October 31, 2011) [Refer Note 40(e)]

HCL Infocom Limited India 100 100

Digilife Distribution and Marketing ServicesLimited India 100 100

RMA Software Park Private Limited India 100 100

HCL Insys Pte. Limited Singapore 100 100

HCL Investments Pte. Limited Singapore 100 100

Pimpri Chinchwad eServices Limited India 85 100

HCL Touch Inc. USA 100 -(Refer Note 40(d))

Step-down Subsidiary of HCL Insys Pte. LimitedHCL Infosystems MEA FZCO(60% Shareholding till December 31, 2011) Dubai 100 60

Step-down Subsidiary of HCL Infosystems MEA FZCOHCL Infosystems LLC, Dubai# Dubai 49 49HCL Infosystems MEA LLC, Abu Dhabi# Abu Dhabi 49 49HCL Infosystems Qatar, WLL# Qatar 49 -

Step-down Subsidiary of HCL Investments Pte. LimitedHCL Infosystems South Africa Pty. Limited South Africa 100 100

Joint Venture through HCL Infocom LimitedNokia HCL Mobile Internet Services Limited India 49 49

Joint Venture through HCL Investments Pte. LimitedTechmart Telecom Distribution FZCO, Dubai Dubai 20 20[Refer Note 40(g)]

# Due to control over composition of the Board of Directors.

b. BASIS OF PREPARATION

These consolidated financial statements have been prepared under the historical cost convention on the accrual basisin accordance with the accounting principles generally accepted in India. These financial statements have been preparedto comply in all material aspects with the Accounting Standards notified under Section 211(3C) [Companies (AccountingStandards) Rule 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Group’s normal operating cycle andother criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the timebetween the acquisition of assets for processing and their realisation in cash and cash equivalents, the Group hasascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities,except for System Integration business. The System Integration business which comprises of long-term contracts andhave an operating cycle exceeding one year. For classification of current assets and liabilities related to System Integrationbusiness, the Group elected to use the duration of the individual contracts as its operating cycle.

Notes to the Consolidated Financial Statements



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Subsidiaries have been consolidated on on a line-by-line basis by adding together the book values of like items ofassets, liabilities, income and expenses after eliminating intra-group balances/transactions in full as per AccountingStandard 21 on 'Consolidated Financial Statements'.

Minority Interest represents the minority shareholders' proportionate share of net assets and the net income inconsolidated subsidiaries. Minorities' interest in net profit of consolidated subsidiaries for the year is identified andadjusted against the income in order to arrive at the net income attributable to the shareholders of the Company.

Interests in the assets, liabilities, income and expenses of the joint venture are consolidated using proportionateconsolidation method. Intra-group balances, transactions and unrealised profits/losses are eliminated to the extent ofCompany's proportionate share in such joint venture.

All unrealised surpluses and deficits on transactions among the Group companies are eliminated.

Goodwill has been recorded to the extent that the cost of acquisition exceeds the book value of group's share ofidentifiable net assets in each acquired company. The goodwill arising on consolidation is tested for impairment at eachbalance sheet date.

Accounting policies among the Group companies are consistent to the extent practicable.

c. FIXED ASSETS

Tangible Fixed Assets including in-house capitalisation and Capital work-in-progress are stated at cost except thosewhich are revalued from time to time on the basis of current replacement cost/value to the Group, net of accumulateddepreciation.

Assets taken on finance lease on or after April 1, 2001 are stated at fair value of the assets or present value of minimumlease payments whichever is lower.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the futurebenefits from the existing asset beyond its previously assessed standard of performance.

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at costare recognised in the Statement of Profit and Loss.

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, ifany. Intangible assets are amortised on a straight line basis over their estimated useful lives.

d. DEPRECIATION AND AMORTISATION

(a) Depreciation and amortisation has been calculated as under:

(i) Depreciation on tangible fixed assets is provided on a pro-rata basis using the straight-line method based oneconomic useful life determined by way of periodical technical evaluation. Intangible assets (other thanGoodwill) are amortised over their estimated useful life.

Economic useful lives which are not exceeding those stipulated in Schedule XIV of the Companies Act, 1956are as under:

Tangible Assets:Plant & Machinery* 4-8 yearsBuildings

- Factory 25-28 years- Others 50-58 years- Capitalised prior to 1.5.1986 As per Section 205(2)(b) of the Companies Act, 1956

Furniture and Fixture 4-6 yearsAir Conditioners* 3-6 yearsVehicles 4-6 yearsOffice Equipment 3-6 yearsNetworking Equipments 3-6 yearsComputers 3-5 years

Intangible Assets (other than Goodwill):Intellectual Property Rights 5-7 yearsSoftware 1-5 years

* For HCL Infinet Limited the economic useful life was 9.67 years.

(ii) The assets taken on finance lease on or after April 1, 2001 are depreciated over their expected useful lives.



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(b) Leasehold Land is amortised over a period of lease. Leasehold improvements are amortised on straight line basisover the period of three years or lease period whichever is lower.

(c) Goodwill arising on acquisition is tested for impairment at each balance sheet date.

(d) The one-time license fee capitalised is amortised equally over the balance period of license from the date of license.

(e) Individual assets costing ` 5,000 or less are depreciated/amortised fully in the year of acquisition.

(f ) The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expecteduseful life of the asset is significantly different from previous estimates, the amortisation period is changedaccordingly. Gains or losses arising from the retirement or disposal of an intangible asset are determined as thedifference between the net disposal proceeds and the carrying amount of the asset and recognised as income orexpense in the Statement of Profit and Loss.

e. INVESTMENTS

Current investments are carried at lower of cost or fair value where fair value for mutual funds is based on net assetvalue and for bonds is based on market quotes.

f. INVENTORIES

Raw Materials and Components held for use in the production of Finished Goods and Work-In-Progress are valued atcost if the finished goods in which they will be incorporated are expected to be sold at or above cost. If there is a declinein the price of materials/components and it is estimated that the cost of finished goods will exceed the net realisablevalue, the materials/ components are written down to net realisable value measured on the basis of their replacementcost. Cost is determined on the basis of weighted average.

Finished Goods, Stock In-Trade and Work-In-Progress are valued at lower of cost and net realisable value.

Cost of Finished Goods and Work-In-Progress includes cost of raw materials and components, direct labour andproportionate overhead expenses. Cost is determined on the basis of weighted average.

Stores and Spares are valued at lower of cost and net realisable value/future economic benefits expected to arise whenconsumed during rendering of services. Adequate adjustments are made to the carrying value for obsolescence. Cost isdetermined on the basis of weighted average.

Goods In Transit are valued inclusive of custom duty, where applicable.

g. FOREIGN CURRENCY TRANSACTIONS

a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchangedifferences arising on settlement of transactions, are recognised as income or expense in the year in which theyarise.

b) At the balance sheet date, all monetary items denominated in foreign currency, are reported at the exchange ratesprevailing at the balance sheet date and the resultant gain or loss is recognised in the Statement of Profit and Loss.Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reportedusing the exchange rate at the date of the transaction.

c) With respect to exchange differences arising on translation of long term foreign currency monetary items having aterm of 12 months or more, from July 1, 2011 onwards, the Group has adopted the following policy:

(i) Exchange differences relating to long term foreign currency monetary items, arising during the year, in so faras they relate to the acquisition of a depreciable capital asset are added to or deducted from the cost of theasset and depreciated over the balance life of the asset.

(ii) In other cases, such differences are accumulated in the "Foreign Currency Monetary Translation DifferenceAccount" and amortised over the balance period of the long term assets/liabilities but not beyondMarch 31, 2020.

d) In case of forward foreign exchange contracts where an underlying asset or liability exists at the balance sheetdate, the premium or discount arising at the inception of forward exchange contracts is amortised as expense orincome over the life of the contract. Exchange differences on such a contract are recognised in the statement ofProfit and Loss in the reporting period in which the exchange rate change.




97

e) Forward exchange contracts outstanding as at the year end on account of firm commitment / highly probableforecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Lossand gains are ignored in accordance with the Announcement of Institute of Chartered Accountants of India on'Accounting for Derivatives' issued in March 2008.

f ) Any profit or loss arising on cancellation or renewal of a forward exchange contract are recognised as income or asexpense for the period.

g) The financial statements of an integral foreign operation are translated using the principles and procedures as ifthe transactions of the foreign operation are those of the Company itself.

h) In translating the financial statements of a non-integral foreign operation for incorporation in financial statements,the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated atthe closing rate; income and expense items of the non-integral foreign operation are translated at average exchangerates prevailing during the year; and all resulting exchange differences are accumulated in a "Foreign CurrencyTranslation Reserve" until the disposal of the net investment.

h. EMPLOYEE BENEFITS

Defined Benefit:

Gratuity

Liability for gratuity is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuariallosses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Provident Fund

Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Group hasno further obligations. Such benefits are classified as Defined Contribution Schemes as the Group does not carry anyfurther obligations, apart from the contributions made on a monthly basis.

In respect of certain employees, Provident Fund contributions are made to a multi-employer Trust administered by theCompany. The Group's liability is actuarially determined (using the Projected Unit Credit method) at the end of the yearand any shortfall in the fund size maintained by the Trust set up by the Company is additionally provided for. Actuariallosses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

Other Benefits:

Compensated Absences:

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end ofthe year end are treated as short term employee benefits. The obligation towards the same is measured at the expectedcost of accumulating compensated absences as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the endof the year end are treated as other long term employee benefits. The Group's liability is actuarially determined (usingthe Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statement ofProfit and Loss in the year in which they arise.

Defined Contribution:

Group's contribution towards Superannuation Fund is accounted for on accrual basis. The Group makes definedcontribution to a Superannuation Trust established for the purpose. The Group has no further obligations beyond itsmonthly contributions.

i. REVENUE RECOGNITION

(a) Sales, after adjusting trade discount, are inclusive of excise duty and the related revenue is recognised on transferof all significant risks and rewards to the customer and when no significant uncertainty exists regarding realisationof the consideration.

(b) Composite contracts, outcome of which can be reliably estimated, where no significant uncertainty exists regardingrealisation of the consideration, revenue is recognised in accordance with the percentage completion method,under which revenue is recognised on the basis of cost incurred as a proportion of total cost expected to be incurred.The foreseeable losses on the completion of contract, if any, are provided for immediately.



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(c) Service income includes income:

i) From maintenance of products and facilities under maintenance agreements and extended warranty, which isrecognised upon creation of contractual obligations rateably over the period of contract, where no significantuncertainty exists regarding realisation of the consideration.

ii) From software services:

(a) The revenue from time and material contracts is recognised based on the time spent as per the terms ofcontracts.

(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeablelosses, if any, on the completion of contract are recognised immediately.

iii) Virtual private networks: Revenue is recognised on proportionate basis over the period of contract with thecustomer. One time charges recovered upfront from the customer are recognised as revenue at thecommencement of service.

iv) Technical help desk: The Group is engaged in providing technical and administrative help desk support to itsvarious customers through the web. Revenue for the same has been recognised based on fulfilling obligationsas contracted in the respective agreements.

(d) Contract-in-progress:

For System Integration business, difference between cost incurred plus recognised profit/less recognised lossesand the amount due for payment is disclosed as contract-in-progress.

j. GOVERNMENT GRANTS

Revenue grants, where reasonable certainty exists that the ultimate collection will be made, are recognised on asystematic basis in Statement of Profit and Loss over the periods necessary to match them with the related cost whichthey are intended to compensate.

k. LICENSE FEES - REVENUE SHARE

With effect from December 16, 2004, the variable license fee is computed as per the License Agreement for Provision ofInternet Services (including Internet Telephony), License Agreement for National Long Distance Service and fromDepartment of Telecommunications (DOT) letter dated June 21, 2006, and is being charged to the Statement of Profitand Loss in the year in which the related revenue from the Group's Networking and Internet related products andservices segment arises.

l. ROYALTY

Royalty expense, net of performance based discounts, is recognised when the related revenue is recognised.

m. LEASES

a) Assets taken under leases where the Group has substantially all the risks and rewards of ownership are classified asfinance leases. Such assets are capitalised at the inception of the lease at the lower of fair value or the present valueof minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocatedbetween the liability and the interest cost, so as to obtain a constant periodic rate of interest on outstanding liabilityfor each period.

b) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as anasset under the lease.

c) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on straight-line basisover the lease term.

d) Profit on sale and leaseback transactions is recognised over the period of the lease.

e) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in thelease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is recognisedover the period of the lease so as to yield a constant rate of return on the net investment in the lease.




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f ) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over thelease term.

g) In sale and leaseback transactions and further sub-lease resulting in financial leases, the deemed sale is recognisedat fair value at an amount equal to the net investment in the lease where substantially all risks and rewards ofownership have been transferred to the sub-lessee. A liability is created at the inception of the lease at the lower offair value or the present value of minimum lease payments for sale and leaseback transaction. Each lease rentalpayable/receivable is allocated between the liability/receivable and the interest cost/income, so as to obtain aconstant periodic rate of interest on outstanding liability/receivable for each period.

n. SEGMENT REPORTING

The accounting policies adopted for segment reporting are in conformity with the accounting policies consistentlyused in the preparation of consolidated financial statements. The basis of reporting is as follows:

a) Revenue and expenses distinctly identifiable to a segment are recognised in that segment. Identified expensesinclude direct material, labour, overheads and depreciation on fixed assets. Expenses that are identifiable with/allocable to segments have been considered for determining segment results.

Allocated expenses include support function costs which are allocated to the segments in proportion of the servicesrendered by them to each of the business segments. Depreciation on fixed assets is allocated to the segments onthe basis of their proportionate usage.

b) Unallocated expenses/income are enterprise expenses/income, which are not attributable or allocable to any ofthe business segment.

c) Assets and liabilities which arise as a result of operating activities of the segment are recognised in that segment.Fixed assets which are exclusively used by the segment or allocated on a reasonable basis are also included.

d) Unallocated assets and liabilities are those which are not attributable or allocable to any of the segments andincludes liquid assets like investments, bank deposits and investments in assets given on finance lease.

e) Segment revenue resulting from transactions with other business segments is accounted on the basis of transferprice which is at par with the prevailing market price.

o. BORROWING COSTS

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that necessarily takesubstantial period of time to get ready for their intended use are capitalised along with the respective fixed asset up tothe date such asset is ready for use. Other borrowing costs are charged to the Statement of Profit and Loss.

p. CURRENT AND DEFERRED TAX

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profitor loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in in accordancewith the taxation laws prevailing in the respective jurisdiction where the Group conducts the business.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferredtax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certaintythat sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferredtax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enactedby the Balance Sheet date. At each Balance Sheet date, the Group reassesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognisedamounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred taxliabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current taxand where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governingtaxation laws.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidencethat the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheetdate and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincingevidence to the effect that the Company will pay normal income tax during the specified period.



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q. PROVISIONS AND CONTINGENT LIABILITIES

The Group creates a provision when there is a present obligation as a result of a past event that probably requires anoutflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingentliability is made when there is a possible obligation or a present obligation that probably will not require an outflow ofresources or where a reliable estimate of the amount of the obligation cannot be made.

r. USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principlesrequires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reportingperiod. Examples of such estimates include estimate of cost expected to be incurred to complete performance undercomposite arrangements, income taxes, provision for warranty, employment benefit plans, provision for doubtful debtsand estimated useful life of the fixed assets. The actual results could differ from those estimates. Any revision to accountingestimates is recognised prospectively in current and future periods.

s. EMPLOYEE STOCK OPTION SCHEME

The Group calculates the employee stock compensation expense based on the intrinsic value method wherein theexcess of market price of underlying equity shares as on the date of the grant of options over the exercise price of theoptions given to employees under the Employee Stock Option Scheme of the Group, is recognised as deferred stockcompensation expense and is amortised over the vesting period on the basis of generally accepted accounting principlesin accordance with the guidelines of Securities and Exchange Board of India.

t. IMPAIRMENT OF ASSETS

At the each balance sheet date, the Group assesses whether there is any indication that an asset (tangible and Intangible)may be impaired. If any such indication exists, the Group estimates the recoverable amount and if the carrying amountof the asset exceeds its recoverable amount, an impairment loss is recognised in the Statement of Profit and Loss to theextent the carrying amount exceeds the recoverable amount.

u. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investmentswith original maturities of three months or less.

v. RESEARCH AND DEVELOPMENT

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognised asan intangible asset when technical and commercial feasibility of the project is demonstrated, future economic benefitsare probable, the Group has ability and intention to complete the asset and use or sell it and cost can be measuredreliably.




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2- Share CapitalAuthorised55,00,00,000 Equity Shares (2011 - 55,00,00,000) of ` 2/- each 110.00 110.005,00,000 Preference Shares (2011 - 5,00,000) of `100/- each 5.00 5.00Total 115.00 115.00Issued, Subscribed and Paid up22,28,79,629 Equity Shares (2011-22,28,79,629)of ` 2/- each (fully paid up) 44.58 44.58Add: Shares Forfeited (1,000 shares of ` 1/- each) 0.00 0.00Total 44.58 44.58

Notes:(i) Rights attached to Equity Shares:

The Company has only one class of equity share having a face value of ` 2/- each. Each holder of equity shares is entitledto one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by theBoard of Directors is subject to the approval of the Shareholders in ensuing General Meeting, except in case of interimdividend.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets ofthe Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equityshares held by Shareholders.

(ii) Shares reserved for issue under options:For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 33.

(iii) Shareholders holding more than 5% of the aggregate shares in the Company

As at 30.06.2012 As at 30.06.2011Particulars Number of % of Number of % of

Shares shares Shares Shares(a) HCL Corporation Private Limited (Formerly

known as 'Guddu Investments (Pondi)Private Limited') 95,500,651 42.85 95,500,651 42.85

(b) Franklin Templeton Investment Funds 21,249,492 9.53 21,287,892 9.55(c) HSBC Global Investment funds Mauritius Ltd. 16,300,000 7.31 16,300,000 7.31(d) AKM Systems Pvt. Ltd. 12,179,627 5.46 11,997,007 5.38


3- Movement in Share capital and Reserves and surplus (`/crores, except Number of Shares)Particulars Number of Share Capital Securities General Debenture Foreign Surplus in Total

Shares Capital Reserve Premium Reserve Redemption Currency the ReservesAccount Reserve Translation Statement and

Reserve of Consolidated SurplusProfit and Loss

As at July 1, 2010 218,258,502 43.65 0.04 826.30 193.25 8.00 - 803.76 1,831.35Issue of equity shares on conversion of share warrants 4,620,667 0.93 - 69.74 - - - - 69.74Issue of equity shares on exercise of employee stock options 460 0.00 # - - - - - - -Addition/deletion to Foreign Currency Transaltion Reserve - - - - - - (1.19) - (1.19)Profit for the year - - - - - - - 168.19 168.19Proposed Dividend - - - - - - - (44.58) (44.58)Corporate Dividend Distribution Tax on Proposed Dividend - - - - - - - (7.23) (7.23)Interim Dividend - - - - - - - (131.72) (131.72)Corporate Dividend Distribution Tax on Interim Dividend - - - - - - - (21.88) (21.88)Transfer to Debenture Redemption Reserve - - - - - 4.00 - (4.00) -Transfer to General Reserve - - - - 17.72 - - (17.72) -Securities Premium Account utilised during the year - - - (0.04) - - - - (0.04)As at June 30, 2011 222,879,629 44.58 0.04 896.00 210.97 12.00 (1.19) 744.82 1,862.64

As at July 1, 2011 222,879,629 44.58 0.04 896.00 210.97 12.00 (1.19) 744.82 1,862.64Addition/deletion to Foreign Currency Translation Reserve - - - - - - 9.55 - 9.55Profit for the year - - - - - - - 72.07 72.07Interim Dividend - - - - - - - (66.87) (66.87)Corporate Dividend Distribution Tax on Interim Dividend - - - - - - - (10.86) (10.86)Transfer from Debenture Redemption Reserve - - - - - (12.00) - 12.00 -Transfer to General Reserve - - - - 4.79 - - (4.79) -As at June 30, 2012 222,879,629 44.58 0.04 896.00 215.76 - 8.36 746.37 1,866.53# Represents ` 920


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4- Long-term borrowingsSecured:Debentures - 80.00Term Loans

- From Banks 53.34 -- From Others 5.69 10.49

Deferred Payment Liabilities 3.55 5.9262.58 96.41

Unsecured:Term Loans

- From Others 21.18 30.45Finance Lease Obligation (Refer Note 34) 48.44 69.51

69.62 99.96TOTAL 132.20 196.37

Notes:1. The Company issued 800 Rated Taxable Secured Redeemable Non-Convertible Debentures of face value of ` 10 lakhs each, aggregating

to ` 80.00 Crores, at a coupon rate of 12.75% per annum payable annually on private placement basis to Life Insurance Corporation ofIndia on December 19, 2008. These Debentures were redeemable at par at the end of 5th year from the date of allotment, with a calloption exercisable by the issuer, only at the end of 3 years from the date of allotment and secured by way of first mortgage and chargeon identified immovable and movable assets of the Company. During the year, on December 19, 2011 the Company has exercised it’scall option and accordingly has repaid these debentures.

2. Secured Term Loan from Others amounting to ` 6.19 Crores (2011 - ` 11.82 Crores), out of which ` 6.08 Crores (2011- ` 5.62 Crores) isshown under current maturity of long term debt, is secured by way of first charge on specified assets of the Company as per the contractterms. The loans are repayable in 20 equal quarterly installments from the date of the loans and carries interest @ 7.8 to 8.5 % p.a.

3. Secured Term Loan from Others amounting to ` 5.34 Crores (2011 - ` 4.01 Crores) is secured by way of first charge on specified propertytaken against this loan. The loan bears interest at 6 months EIBOR + 3% p. a. and is payable in 144 months.

4. Secured Term Loan from Others amounting to ` 0.37 Crores (2011 - ` 0.40 Crores), out of which ` 0.15 Crores (2011- ` 0.11 Crores) isshown under current maturity of long term debt, is secured against the hypothecation charge on the vehicles. The loans are payable overa period of 4 years with installments payable each month.

5. Secured Term Loan from Banks amounting to ` 80 Crores (2011 - ` Nil), out of which ` 26.67 Crores (2011 - ` Nil) is shown under currentmaturity of long term debt, is secured by way of first charge on movable and immovable fixed assets of the Company. The loans isrepayable in 6 half yearly installments from the date of the loan which carries interest @ 11.25 % p.a.

6. Unsecured Term loans from Others amounting to ` 31.26 Crores (2011 - ` 44.47 Crores) and ` 0.07 Crores (2011 - ` 0.21 Crores), out ofwhich ` 10.15 Crores (2011 - ` 14.23 Crores) is shown under current maturity of long term debt, are repayable in 8 to 19 equal quarterlyinstallments from the date of the loans and in 3 equal yearly installments from the date of the loan and balance payable in 4th yearrespectively and are interest free.

7. Deferred Payment liabilities amounting to ` 5.92 Crores (2011 - ` 8.29 Crores), out of which ` 2.37 Crores (2011 - ` 2.37 Crores) is shownunder current maturity of long term debt, is towards payment for the land taken on leasehold basis from Greater Noida DevelopmentAuthority. This is secured by way of charge on the land.


5- Other long-term liabilitiesTrade Payables

- Oustanding due to Other than Micro and SmallEnterprises [Including Acceptance ` 66.81Crores (2011 - ` Nil)] 121.15 10.39Deferred Revenue 24.39 42.89Others 3.29 5.30

TOTAL 148.83 58.58

6- Long-term provisionsProvision for Gratuity and Other EmployeeBenefits (Refer Note 37) 26.50 29.23

TOTAL 26.50 29.23



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7- Short-term borrowingsSecured:Loans from Banks

- Cash Credits 17.40 48.41

17.40 48.41Unsecured:Loans repayable on demand

- From Other Parties 3.40 7.69

Others- Commercial Paper 265.00 280.00- Buyers Credit 6.61 -- Term Loans from Banks 200.00 55.00

475.01 342.69

TOTAL 492.41 391.10

Note:Cash Credits along with non-fund based facilities from Banks are secured by way of hypothecation of stock-in-trade, bookdebts as first charge and by way of second charge on all the immovable and movable assets of the Company. The chargeranks pari-passu amongst Bankers.



8- Trade payablesTrade Payables

- Oustanding due to Micro and Small Enterprises 1.89 1.17- Oustanding due to Other than Micro and SmallEnterprises [Including Acceptance ` 651.61 Crores(2011 - ` 380.45 Crores)] 1,744.95 1,527.03

TOTAL 1,746.84 1,528.20

9- Other current liabilitiesCurrent Maturities of Long-Term Debts (Refer Note 4) 45.42 22.33Current Maturities of Finance Lease Obligations 20.90 18.51(Refer Note 4 and 34)Interest Accrued but not due on Borrowings 0.75 6.65Unpaid Dividends* 3.90 3.79Deferred Revenue 146.66 181.56Advances Received from Customers 148.85 114.73Statutory Dues Payable 87.45 75.85Employees Benefits Payable 39.63 72.86Capital Creditors 39.74 17.29Other Payable 17.14 0.08

TOTAL 550.44 513.65

* There are no amount due and outstanding to be credited to Investor Education and Protection fund under Section 205C ofthe Companies Act , 1956 as at June 30, 2012. These shall be credited and paid to the Fund as and when due.


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11- Fixed Assets`/Crores

Particulars Gross Block Depreciation/Amortisation Net BlockAs at Additions Disposal As at As at Additions Disposal As at As at As at

01.07.2011 30.06.2012 01.07.2011 30.06.2012 30.06.2012 30.06.2011

Tangible Assets:

Leasehold Land 79.26 - - 79.26 1.99 0.89 - 2.88 76.38 77.27

Leasehold Premises 1.82 - 0.23 1.59 0.15 - - 0.15 1.44 1.67

Assets Given on Operating Lease

Plant and Machinery 35.84 16.39 0.14 52.09 9.86 6.06 0.10 15.82 36.27 25.98

Own Assets

Land 25.71 - - 25.71 - - - - 25.71 25.71

Buildings 90.40 8.36 2.16 96.60 19.36 2.35 0.53 21.18 75.42 71.04

Plant and Machinery 91.23 2.02 59.14 34.11 61.67 4.89 42.83 23.73 10.38 29.56

Furniture and Fixtures 41.96 2.78 4.28 40.46 29.02 4.86 3.87 30.01 10.45 12.94

Office Equipments 18.40 3.54 1.34 20.60 8.35 2.78 0.54 10.59 10.01 10.05

Vehicles 2.54 1.43 0.06 3.91 1.44 0.51 - 1.95 1.96 1.10Computers 41.20 15.61 2.46 54.35 27.01 9.75 1.83 34.93 19.42 14.19

Sub-Total (a) 428.36 50.13 69.81 408.68 158.85 32.09 49.70 141.24 267.44 269.51

Previous Year 381.02 57.02 9.68 428.36 135.85 29.24 6.24 158.85 269.51

Intangible Assets:

Goodwill 1.33 - 0.02 1.31 0.68 0.42 - 1.10 0.21 0.65 Software 50.45 1.55 5.11 46.89 13.74 9.95 2.68 21.01 25.88 36.71 Intellectual Property Rights 10.37 26.71 - 37.08 2.07 3.56 - 5.63 31.45 8.30(Refer Note 40(c)) License Fees 2.50 - 2.50 - 0.64 0.04 0.68 - - 1.86 Goodwill on Consolidation 20.29 18.94 6.05 33.18 - - - - 33.18 20.29

Sub-Total (b) 84.94 47.20 13.68 118.46 17.13 13.97 3.36 27.74 90.72 67.81

Previous Year 21.60 63.34 - 84.94 6.76 10.37 - 17.13 67.81

Total (a+b) 358.16 337.32

Notes:1. Land (included under ‘Own Assets’) and Building at Ambattur amounting to ` 0.57 Crores (2011 - ` 0.57 Crores) are pending registration in the

name of the Company.2. Software comprise cost of acquiring licences and SAP implementation charges.3. Intellectual Property Rights comprise of designing and implementing education content.



10- Short-term provisionsProvision for Gratuity and Other Employee Benefits 6.60 3.50(Refer Note 37)Provision for Warranty Liability (Refer Note 31) 11.27 5.47Provision for Income Tax[Net of Advance Income Tax of ` Nil (2011 - ` 701.59 Crores)] - 16.39Provision for Proposed Dividend - 44.58Provision for Corporate Dividend Distribution Tax onProposed Dividend - 7.23

TOTAL 17.87 77.17



105

12- Current investmentsAs at 30.06.2012 As at 30.06.2011


(i) Quoted (Others): Current(At lower of Cost of Fair Value)

Bonds6.85% India Infra Finance Company Limited 2014 ` 100,000 1,000 10.54 ` 100,000 1,000 10.389.02% Indian Renewable Energy DevelopmentAgency Limited 2025 ` 1,000,000 100 10.32 ` 1,000,000 100 10.238.64% Power Grid Corporationof India Limited - 2020 ` 12,50,000 40 5.08 ` 12,50,000 40 5.038.87% Indian Renewable EnergyDevelopment Agency Limited - 2020 ` 1,000,000 100 10.29 ` 1,000,000 100 10.298.90% NABARD - 2013 ` 1,000,000 100 10.39 ` 1,000,000 100 10.458.80% Rural ElectrificationCorporation Limited - 2020 ` 1,000,000 100 10.13 ` 1,000,000 100 10.21

Sub - Total (a) 56.75 56.59

(ii) Unquoted (Others): Current(At lower of Cost or Fair Value)Mutual Funds, Dividend OptionsKotak Floater Long Term - - - ` 10 37,136,064 37.47Birla Sunlife Savings Fund - - - ` 10 35,014,480 35.05IDFC Money Manager Fund - TreasuryPlan - Super Institutional Plan C Growth - - - ` 10 34,072,931 34.25Religare Ultra Short Term Fund - Institutional - - - ` 1000 280,224 28.07ICICI Prudential Flexible Income Plan - - - ` 100 2,422,243 25.55Tata Floater Fund - - - ` 10 9,919,946 10.00UTI Treasury Advantage Fund Institutional Weekly - - - ` 1000 99,559 10.00HDFC Cash Management Fund- Treasury Advantage Plan - - - ` 10 8,977,471 9.01Reliance Money Manager Fund- Institutional Option - Weekly Dividend - - - ` 1000 50,116 5.01

Sub - Total (b) - 194.41

Mutual Funds, Growth OptionsReliance Quarterly Interval Fund - Series III - - - ` 10 40,762,439 53.81Reliance Money Manager Fund -Institutional Option ` 1000 332,921 50.00 - - -IDFC Money Manager Fund -Treasury Plan - Super Institutional Plan C Growth ` 10 38,324,749 50.00 ` 10 45,214,127 53.00Kotak Floater Long Term ` 10 11,454,623 20.00 ` 10 26,161,703 41.14Birla Sunlife Savings Fund ` 100 2,863,382 60.00 ` 10 21,488,508 40.97HDFC Floating Rate Income Fund - Short Term - - - ` 10 24,035,573 40.00HDFC Cash Management Fund -Treasury Advantage Plan ` 10 33,173,272 80.00 - - -ICICI Prudential Floating Rate Plan D - - - ` 100 2,764,693 40.00ICICI Prudential Flexible Income Plan ` 100 3,412,864 70.00 - - -IDFC Fixed Maturity Plan - 100 Days Series 3 - - - ` 10 29,572,535 29.57Tata Floater Fund ` 1000 91,153 15.02 ` 10 16,400,137 24.50Templeton Floating Rate Income FundSuper Institutional - - - ` 10 13,409,919 18.00Religare Ultra Short Term Fund - Institutional - - - ` 1000 112,230 15.10SBI-SHF Ultra Short Term Fund ` 1000 208,963 30.00 - - -

Sub - Total (c) 375.02 356.09

Total Current Investments (a+b+c) 431.77 607.09

Note : Net asset value of Current Investments in Mutual Funds as on June 30, 2012 is ` 375.11 Crores (2011 - ` 557.72 Crores).

Aggregate amount of Quoted Investments (Market value ` 56.75 Crores (2011 - ` 56.59 Crores) 56.75 56.59Aggregate amount of Unquoted Investments 375.02 550.50



106


13- Long-term loans and advancesUnsecured, Considered good:Capital Advances 13.95 4.86Deposits 24.87 21.39Prepaid Expenses 5.71 11.80Advance Income Tax[Net of Provision for Income Tax of ` 510.33 Crores (2011 - ` Nil)] 15.31 9.06Other Loans and Advances 5.04 3.69

TOTAL 64.88 50.80

14- Trade receivables - Non-currentUnsecured:Other Debts

- Considered Good 22.81 21.68

TOTAL 22.81 21.68

15- Other non-current assetsUnbilled Revenue 0.84 0.09Lease Rental Recoverable (Refer Note 34) 335.94 158.77

TOTAL 336.78 158.86

16- InventoriesRaw Materials and Components[Including In-Transit ` 44.71 Crores (2011 - ` 4.23 Crores)] 179.78 145.84Work-In-Progress 1.14 1.46Finished Goods[Including In-Transit ` 28.12 Crores (2011 - ` 28.22 Crores)] 60.39 62.37Stock-In-Trade[Including In-Transit ` 77.03 Crores (2011 - ` 45.69 Crores)] 385.60 324.85Stores and Spares 80.41 79.74

TOTAL 707.32 614.26

17- Trade receivablesUnsecured:Debts outstanding for a period exceeding six monthsfrom the date they are due for payment

- Considered Good 308.19 343.26- Considered Doubtful 84.58 43.71

392.77 386.97Other Debts

- Considered Good 910.26 972.111,303.03 1,359.08

Less: Provision for Doubtful Debts 84.58 1,218.45 43.71 1,315.37

TOTAL 1,218.45 1,315.37




107


18- Cash and bank balancesCash and Cash EquivalentsBalances with Banks

- On Current Account 195.58 184.82 Less: Money held in Trust 0.01 195.57 0.01 184.81 - On Dividend Account 3.90 3.79

Cash on Hand 0.07 0.09Cheques on Hand 76.30 61.05Bank Deposits with original maturity ofthree months or less 9.97 5.82Less: Money held in Trust 0.32 9.65 0.32 5.50Other Bank Balances (Expected to be realised within one year)Bank Deposits with original maturity of more thanthree months and upto twelve months 7.81 -Bank Deposits with original maturity of more thantwelve months 0.18 7.99 0.22 0.22On Margin Account 9.18 10.27TOTAL 302.66 265.73

19- Short-term loans and advancesUnsecuredConsidered GoodBalances with Customs, Port Trust,Excise and Sales Tax Authorities 64.83 59.51Advances to Creditors 91.47 66.09Deposits with Tax Authorities 12.43 4.66Other Deposits 30.16 49.99MAT Credit Entitlement 10.04 -Prepaid Expenses 73.76 93.90Others 10.68 11.24

Considered DoubtfulDeposits and Other Advances 2.74 0.64Less: Provision for Doubtful Loans and Advances 2.74 - 0.64 -

TOTAL 293.37 285.39

20- Other current assetsLease Rental Recoverable (Refer Note 34) 86.50 26.68Unbilled revenue 47.18 19.42Contract-in-progress (Refer Note 41)* 1,075.87 948.46Unamortised Premium on Forward Contracts 7.06 1.50

TOTAL 1,216.61 996.06

* Out of above contract-in-progress, which includes retention money, ` 589.73 Crores (2011 - ` 726.24 Crores) will be dueafter one year



108


21- Revenue from operationsSale of Products 10,070.14 10,825.66Sale of Services 770.11 716.45Other Operating Revenue

- Scrap Sale 1.01 0.60- Miscellaneous Income 14.47 5.50

TOTAL 10,855.73 11,548.21

22- Other incomeInterest Income

- On Lease Rental 27.53 12.72- On Fixed Deposits (Gross) 0.83 0.05- On Bonds from Quoted (Others) Current Investments 4.70 3.01- On Others 0.77 7.21

Dividend from Unquoted (Others) Current Investments 1.97 28.91Profit on Disposal of Unquoted (Others) Current Investments 41.09 9.37Net Profit/(Loss) on Sale of Fixed Assets 1.96 (0.21)Provisions/Liabilities no longer required written back 17.77 20.10Miscellaneous Income 4.86 3.42Gain on Sale of Subsidiary (Refer Note 40(e)) 25.55 -

TOTAL 127.03 84.58

23- Changes in inventories of finished goods,work-in-progress and stock-in-tradeClosing Stock

- Finished Goods (Including in Transit) 60.39 62.37[Including excise duty of ` 2.72 Crores (2011 - ` 2.71 Crores)]

- Stock-In-Trade 385.60 324.85- Work-In-Progress 1.14 1.46

447.13 388.68Opening Stock

- Finished Goods (Including in Transit) 62.37 89.31[Including excise duty of ` 2.71 Crores (2011 - ` 5.00 Crores)]

- Stock-In-Trade 324.85 526.08- Work-In-Progress 1.46 -

388.68 615.39

Changes in inventories of finished goods, work-in-progress and stock-in-trade (58.45) 226.71

24- Other direct expensePurchase of Services (Refer Note 34(e)(ii)) 196.03 196.85Spares and Stores Consumed 130.29 107.96Power and Fuel 1.69 1.88Labour and Processing Charges 3.21 7.17Royalty 87.18 113.09

TOTAL 418.40 426.95

25- Employee benefits expense (Refer Note 37)Salaries, Wages, Bonus and Gratuity 457.98 458.12Contribution to Provident and Other Funds 21.21 19.05Staff Welfare Expenses 9.65 9.73

TOTAL 488.84 486.90




109


26- Finance costsInterest on Long-term and Short-term Borrowings 76.32 75.23Other Borrowing Costs 3.58 4.15Net Loss on Foreign Exchange Fluctuation 4.72 -

TOTAL 84.62 79.38

27- Other expensesRent (Refer Note 34(d)(ii)) 29.18 30.77Rates and Taxes 9.66 7.65Printing and Stationery 3.75 4.37Communication 15.48 8.44Travelling and Conveyance 49.03 44.52Packing, Freight and Forwarding 48.57 50.85Legal, Professional and Consultancy Charges 78.16 45.26Training and Conference 5.34 4.41Office Electricity and Water 10.42 12.26Insurance 6.82 9.16Advertisement, Publicity and Entertainment 64.36 76.65Hire Charges 3.42 5.00Commission on Sales 7.25 20.61Bank Charges 23.55 14.28Provision for Doubtful Debts 63.40 36.36Provision for Doubtful Loans and Advances 1.31 -Provision for Doubtful Other Current Assets 0.83 0.41Fixed Assets Written-Off 0.92 0.13Goodwill Written Off 6.05 -Diminution in the Value of Unquoted/Quoted (Others)Current Investments (0.20) 2.07Repairs- Plant and Machinery 1.26 2.31- Buildings 1.46 3.43- Others 11.17 13.21License Fees 1.23 3.89Net Loss/(Gain) on Foreign Exchange Fluctuation(other than considered as Finance Cost) 65.77 (10.16)Miscellaneous 19.42 28.81

TOTAL 527.61 414.69



110

29- Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided foramount to `3.50 Crores (2011 - `14.01 Crores).

30- Contingent Liabilities:a) Claims against the Company not acknowledged as debts:


Sales Tax* 44.89 44.60Excise* 9.63 9.32Income Tax* 3.95 3.95Octroi* 5.08 -Industrial Disputes, Civil Suits and Consumer Disputes 16.68 8.64

* Include sum of `18.70 Crores (2011 - ` 9.20 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information.The uncertainties and possible reimbursements are dependent on the out come of the different legal processeswhich have been initiated by the Group or the claimants as the case may be and therefore cannot be predictedaccurately.

b) Corporate Guarantee of ` 72.87 Crores (2011 - ` 132.93 Crores) was given to Banks for working capital facilities sanctionedto Techmart Telecom Distribution FZCO, Dubai (joint venture of HCL Investments Pte. Limited, a subsidiary company)against which the total amount utilised as at June 30, 2012 is ` 72.87 Crores (2011 - ` 110.78 Crores).

28- Land and Buildings and certain Plant and Machinery were revalued by external registered valuers after considering depreciationupto that date on the governing principle of current replacement cost/value. The amounts added/reduced on aforesaidrevaluation in 1992, 2005, 2006 and 2007 were as under:

Date of Revaluation `/Crores

Land June 30, 1992 4.44Land November 1, 2006 16.78Leasehold Land March 27, 2006 and August 13, 2007 2.53Buildings June 30, 1992 6.44Buildings November 1, 2006 0.25Plant and Machinery June 30, 1992 (1.01)

TOTAL 29.43Less: Goodwill 5.70

Transferred to Revaluation Reserve 23.73Less:

-Expenditure incurred on acquisition of business in 1992 0.86-Loss on sale of Land 0.15-Depreciation and Amortisation 0.33-Adjusted on amalgamation of Subsidiaries in earlier years 22.39

Balance as at June 30, 2012 -




111


31- The Group has the following provision for warranty liability in the books of accounts:


Opening Balance as on July 1 5.47 6.46Additions during the year 29.28 12.28Utilised/Reversed during the year 23.48 13.27Closing Balance as on June 30 11.27 5.47

The warranty provision has been recognised for expected warranty claims for the first year of warranty on products soldduring the year. Due to the very nature of such costs, it is not possible to estimate the timing of cash outflows due touncertainties relating to the outflows of economic benefits.

32- Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 and other relevant tax regulations in thejurisdiction where the Group conducts the business to the profit for the financial year ended June 30, 2012, although theactual tax liability of the Group has to be computed each year by reference to taxable profit for each fiscal year endedMarch 31.

b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at June 30, 2012are:

`/Crores

As at Movement As at30.06.11 during the 30.06.12

year

AssetsProvision for Doubtful Debts/Advances/Other Current Assets 13.16 14.75 27.91Impact of expenditure charged to Statement of Consolidated profit and 15.27 (2.34) 12.93loss but allowable for tax purpose in future yearsIncome Tax Losses 4.21 - 4.21Total (A) 32.64 12.41 45.05

LiabilitiesLease rental recoverable 0.11 (0.02) 0.09Depreciation 3.72 2.23 5.95Duties, Taxes and Cess allowed for tax purpose on payment basis 5.72 3.50 9.22Other timing differences 1.71 0.77 2.48Total (B) 11.26 6.48 17.74Net Deferred Tax Assets (A)-(B) 21.38 5.93 27.31Previous Year 13.51 7.87 21.38

33- Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, fora total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. Theseoptions vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercisedwith in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option of ` 10/- confers on the employee a right to five equity shares of ` 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase SchemeGuidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”).


112

Details of Grants made under Employee Stock Option Scheme 2000



28-Jan-04 538.15 128965 - - - 13603 115362 115362(175400) (-) (-) (92) (46343) (128965) (128965)

25-Aug-04 603.95 36984 - - - 13735 23249 23249(46978) (-) (-) (-) (9994) (36984) (36984)

18-Jan-05 809.85 121428 - - - 48424 73004 73004(168082) (-) (-) (-) (46654) (121428) (121428)

15-Feb-05 809.30 - - - - - - -(-) (-) (-) (-) (-) (-) (-)

15-Mar-05 834.40 18263 - - - 7435 10828 10828(24298) (-) (-) (-) (6035) (18263) (18263)

15-Apr-05 789.85 3332 - - - 2452 880 880(4760) (-) (-) (-) (1428) (3332) (3332)

14-May-05 770.15 3655 - - - 2475 1180 1180(4540) (-) (-) (-) (885) (3655) (3655)

15-Jun-05 756.15 675 - - - - 675 675 (675) (-) (-) (-) (-) (675) (675)

15-Jul-05 978.75 10480 - - - 9584 896 896(11722) (-) (-) (-) (1242) (10480) (10480)

13-Aug-05 1144.00 16030 - - - 5929 10101 10101(17630) (-) (-) (-) (1600) (16030) (16030)

15-Sep-05 1271.25 9140 - - - 3862 5278 5278(9140) (-) (-) (-) (-) (9140) (9140)

15-Mar-07 648.75 136700 - - - - 136700 136700(136700) (-) (-) (-) (-) (136700) (136700)

23-Jan-08 898.25 52395 - - - 10995 41400 41400(61125) (-) (3060) (-) (5670) (52395) (32078)

18-Aug-09 627.25 20000 - - - - 20000 12000(20000) (-) (-) (-) (-) (20000) (6000)

26-Oct-10 586.75 80000 - - - - 80000 24000(-) (80000) (-) (-) (-) (80000) (-)

2-Feb-11 516.50 12000 - - - - 12000 3600(-) (12000) (-) (-) (-) (12000) (-)

30-Jan-12 233.25 - 16000 - - - 16000 -(-) (-) (-) (-) (-) (-) (-)

18-Jun-12 202.00 - 12000 - - - 12000 -(-) (-) (-) (-) (-) (-) (-)

Total 650047 28000 - - 118494 559553 459153(681050) (92000) (3060) (92) (119851) (650047) (523730)





113

Details of Grants made under Employee Stock Based Compensation Plan 2005



13-Aug-05 1144.00 1738150 - - - 495540 1242610 1242610(1877002) (-) (1430) (-) (137422) (1738150) (1738150)

19-Oct-05 1157.50 35260 - - - 9660 25600 25600(42090) (-) (480) (-) (6350) (35260) (35260)

15-Nov-05 1267.75 16000 - - - 4160 11840 11840(16800) (-) (-) (-) (800) (16000) (16000)

15-Dec-05 1348.25 10700 - - - 3740 6960 6960(13290) (-) (190) (-) (2400) (10700) (10700)

14-Jan-06 1300.00 8740 - - - 1876 6864 6864(10130) (-) (278) (-) (1112) (8740) (8740)

15-Feb-06 1308.00 3240 - - - 648 2592 2592(4040) (-) (120) (-) (680) (3240) (3240)

16-Mar-06 1031.00 12350 - - - 4790 7560 7560(17280) (-) (650) (-) (4280) (12350) (12350)

17-Apr-06 868.75 3900 - - - 1580 2320 2320(6900) (-) (600) (-) (2400) (3900) (3900)

15-May-06 842.50 7850 - - - 1570 6280 6280(14250) (-) (750) (-) (5650) (7850) (7850)

15-Jun-06 620.50 10330 - - - 2450 7880 7880(13950) (-) (460) (-) (3160) (10330) (10330)

17-Jul-06 673.75 10302 - - - 3562 6740 6740(17240) (-) (1578) (-) (5360) (10302) (8504)

15-Mar-07 648.75 341080 - 5580 - 31480 304020 304020(366760) (-) (8380) (-) (17300) (341080) (274100)

23-Jan-08 898.25 146670 - 9690 - 18810 118170 95820(178665) (-) (16650) (-) (15345) (146670) (89550)

16-Aug-11 375.00 - 30000 - - - 30000 -(-) (-) (-) (-) (-) (-) (-)

17-Aug-11 375.00 - 7000 - - - 7000 -(-) (-) (-) (-) (-) (-) (-)

18-Jun-12 202.00 - 4000 - - - 4000 -(-) (-) (-) (-) (-) (-) (-)

Total 2344572 41000 15270 - 579866 1790436 1727086(2578397) (-) (31566) (-) (202259) (2344572) (2218674)




114


Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock Based CompensationPlan 2005 as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs aregiven as under:

Employee Stock Employee Stock BasedOption Scheme 2000 Compensation Plan 2005

Volatility 31% to 68% 31% to 65%Risk free rate 4.57% to 8.24% 6.49% to 8.34%Exercise Price ` 202.00 to `1,271.25 `202.00 to `1,348.25Time to Maturity (years) 2.20 to 5.50 2.50 to 7.00Dividend Yield 9% to 31% 10% to 36%Life of options 8.5 Years 10 YearsFair Value of options as `1.29 to `203.14 `1.37 to `262.97at the grant dateNotes:

1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for


The impact on the profit of the Group for the year ended June 30, 2012 and the basic and diluted earnings per share had theGroup followed the fair value method of accounting for stock options is set out below:

Proforma Disclosures


Profit after tax as per Statement of Consolidated Profit and Loss [Net of Minority Interest] (a) 72.07 168.19Add: Employee Stock Compensation Expense as per Intrinsic Value Method - -Less: Employee Stock Compensation Expense as per Fair Value Method 0.39 0.72Profit after tax recomputed for recognition of employee stock compensation expenseunder fair value method (b)* 71.68 167.47Earning Per Share based on earnings as per (a) above:(Refer Note 35)- Basic `3.23 ` 7.67- Diluted `3.23 ` 7.67Earning Per Share had fair value method been employed for accountingof employee stock options:- Basic `3.22 ` 7.63- Diluted `3.22 ` 7.63

* Excludes impact on tax expense of employee stock compensation expense.



115

34- Leases :

a) Finance Leases:

As Lessor:

(i) The Group has given on finance lease certain assets/inventories which comprise of computers, radio terminals andoffice equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are noexceptional/restrictive covenants in the lease agreements.

(ii) The gross investment in the assets given on finance leases as at June 30, 2012 and its present value as at that dateare as follows:

Total minimum Interest included in Present value oflease minimum lease minimum lease

receivable receivable receivable`/Crores `/Crores `/Crores



Later than five years 2.62 0.15 2.47(5.45) (0.24) (5.21)

Total 441.60 80.36 361.24(131.93) (15.38) (116.55)


b) Sale and Leaseback and further sub-lease on as finance lease basis

(i) The Group has entered into transaction of sale and leaseback on finance lease basis and further sub-lease onfinance lease basis for certain assets/inventories which comprise of computer systems and other related products.These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenantsin these lease agreements.

(ii) Details of mimimum lease payments and mimimum sub-lease receivables as at June 30, 2012 and its present valueas at that date are as follows:


Payable on sale and leaseback Receivable on Sub-lease

Total minimum Interest included Present value of Total minimum Interest included Present value oflease payable in minimum minimum lease lease receivable in minimum minimum lease

lease payable payable lease receivable receivable`/Crores `/Crores `/Crores `/Crores `/Crores `/Crores

Not later than one year 22.90 5.33 17.57 22.52 4.47 18.05(23.43) (6.86) (16.57) (18.63) (6.01) (12.62)

Later than one year and 44.23 6.49 37.74 48.51 5.36 43.15not later than five years (67.22) (11.73) (55.49) (66.13) (9.85) (56.28)

Total 67.13 11.82 55.31 71.03 9.83 61.20(90.65) (18.59) (72.06) (84.76) (15.86) (68.90)



116

c) Sale and Leaseback

As Lessee:Total minimum Interest included in Present value of

lease minimum lease minimum leasepayable payable payable`/Crores `/Crores `/Crores



Total 16.87 2.84 14.03(20.33) (4.37) (15.96)

d) Cancelable Operating Leases

As Lessee:

(i) The Group has taken various residential/commercial premises under cancelable operating leases. These leases arenormally renewable on expiry.

(ii) The rental expense in respect of operating leases is ` 29.18 Crores (2011 - ` 30.77 Crores) which is disclosed as Rentexpense under ‘Other expenses’.

As Lessor:

The gross block, accumulated depreciation and depreciation expense in respect of building and office automationproducts i.e. photocopying machines given on operating lease are as below:


Gross Block 57.66 41.42Accumulated Depreciation 17.85 11.79Net Block 39.81 29.63Depreciation Expense 5.96 4.38

e) Non-Cancelable Operating Leases

As Lessee:

(i) The Group has taken computers and furniture and fixtures on non-cancelable operating leases the future minimumlease payments in respect of which are:


Not later than one year 1.24 4.04 Later than one year and not later than five years 1.77 4.15 Total 3.01 8.19

(ii) Minimum lease payments in respect of assets taken on lease recognised as an expense in the Statement of Profitand Loss for the year ended June 30, 2012 are ` 2.23 Crores (2011 - ` 4.10 Crores) which is included in Purchase ofServices under ‘Other direct expenses’.




117


35- Earnings per share (EPS)

The earnings considered in ascertaining the Group’s EPS represent profit for the year after tax. Basic EPS is computed anddisclosed using the weighted average number of equity shares outstanding during the year. Diluted EPS is computed anddisclosed using the weighted average number of equity and dilutive equivalent shares outstanding during the year exceptwhen results would be anti-dilutive.

Calculation of EPS:

Particulars 2012 2011

Profit after tax (`/Crores) [Net of Minority Interest] 72.07 168.19Weighted average number of shares considered asoutstanding in computation of Basic EPS 222,879,629 219,350,542Add: Dilutive impact of stock options

- Issued for no consideration 246 152Weighted average number of shares outstandingin computation of Diluted EPS 222,879,875 219,350,694Basic EPS (of ` 2/- each) `3.23 ` 7.67Diluted EPS (of ` 2/- each) `3.23 ` 7.67

36. Segment Reporting

The Group recognises the following segments as its primary segments.

a) The operations of Computer Systems and Other Related Products and Services consists of manufacturing of computerhardware systems, providing comprehensive Systems Integration, Roll out and Infrastructure management solutions indifferent Industry verticals, providing IT services including maintenance and facility management and ICT training.

b) The businesses of Telecommunication and Office Automation comprise of distribution of telecommunication and otherdigital lifestyle products, office automation products and related comprehensive maintenance and allied services, andHomeland security and surveillance.

c) Internet and Related Services segment provides Internet and related services through HCL Infinet Limited, which ceasedto be Company’s subsidiary with effect from October 31, 2011, to business enterprises. The offerings include Internetaccess services, virtual private network and other connectivity services.

Secondary segmental reporting is based on the geographical location of the customers. Details of secondary segmentsare not disclosed as more than 90% of the Group’s revenues, results and assets relate to the Indian domestic market.


118

(i) RevenueExternal Revenue 3296.08 7521.83 22.34 10840.25

(3690.40) (7782.41) (69.30) (11542.11)Inter-segment Revenue 32.54 9.32 0.77 -42.63

(1.01) (22.46) (5.42) (-28.89)Total Gross Revenue 3328.62 7531.15 23.11 -42.63 10840.25

(3691.41) (7804.87) (74.72) (-28.89) (11542.11)Less: Excise Duty 86.20 86.20

(122.19) (122.19)Total Net Revenue 3242.42 7531.15 23.11 -42.63 10754.05

(3569.22) (7804.87) (74.72) (-28.89) (11419.92)(ii) Results -2.68 155.95 -5.54 147.73

(117.82) (192.76) (-10.71) (299.87)Less: Unallocable Expenditure 87.98

(55.53)Operating Profit 59.75

(244.34)Add: Other Income (Excluding Operational Income) 109.26

(64.48)Less: Finance Charges 84.62

(79.38)Profit Before Tax 84.39

(229.44)Less: Tax Expense 14.39

(60.11)Profit After Tax 70.00

(169.33)(iii) Segment Assets 3130.20 956.82 - 4087.02

(2918.50) (829.28) (42.81) (3790.59)Unallocated Corporate Assets a) Liquid Assets 438.39

(607.62) b) Others 500.79

(307.31)Total Assets 5026.20

(4705.52)(iv) Segment Liabilities 2003.45 540.35 - 2543.80

(1555.09) (519.34) (50.83) (2125.26)Unallocated Corporate Liabilities 571.29

(669.04)Total Liabilities 3115.09

(2794.30)(v) Capital Expenditure 75.70 20.64 0.50 96.84

(82.45) (33.02) (2.89) (118.36)(vi) Depreciation 32.90 9.68 1.30 43.88

(24.73) (7.18) (3.77) (35.68)(vii) Other Non Cash Expenses 63.36 14.42 0.68 78.46

(25.96) (7.97) (0.22) (34.15)Note: Previous year’s figures are given in brackets.

Segment Results include ` 17.77 Crores (2011 - ` 20.10 Crores) of certain Operating other income which is included in‘Other income’ in the Statement of Profit and Loss.

Consolidated Segment wise performance for the year ended June 30, 2012 `/Crores

Primary Segments Computer Telecommuni- Internet and Inter-segment TotalSystems & Other cation & Office Related Services EliminationRelated Products Automation (Discontinued

and services operations)[Refer Note 40(e)]




119


37- The Group has calculated the various benefits provided to employees as under:

(a) Defined Contribution(i) Superannuation Fund

During the year, the Group has recognised the following amounts in the Statement of profit and loss:


Employers Contribution to Superannuation Fund* 2.49 2.10

(b) State Plans(i) Employee State Insurance(ii) Employee’s Pension Scheme 1995During the year, the Group has recognised the following amounts in the Statement of profit and loss:


Employers contribution to Employee State Insurance* 3.82 4.14 Employers contribution to Employee’s Pension Scheme 1995* 7.93 7.21

* Included in Contribution to Provident and Other Funds under Employee benefits expense (Refer Note 25).

(c) Defined Benefit(i) Gratuity(ii) Provident Fund #In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in the respect of theaforesaid defined benefit plan based on the following assumptions:

Gratuity Provident Fund

2012 2011 2012 2011

Discount rate (per annum) 8.60% 8.00% 8.50% 8.50%Rate of increase in compensation levels 7.00% 7.00% Not Not

Applicable ApplicableRate of return on plan assets Not Not Not Not

Applicable Applicable Applicable ApplicableExpected statutory interest rate Not Not 8.50% 8.50%

Applicable ApplicableExpected short fall in interest earnings Not Not 0.05% 0.05%

Applicable ApplicableExpected average remaining working lives 24.34 24.35 24.34 24.35of employees (years)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotionand other relevant factors such as supply and demand in the employment market.

`/Crores2012 2011

Gratuity Provident Gratuity ProvidentFund Fund

Reconciliation of opening and closing balances of thepresent value of the defined benefit obligation:Present value of obligation at the beginning of the year 22.22 123.64 17.61 102.41Acquired on the purchase of business - - 1.32 -Current service cost 3.42 6.97 2.75 5.60Past service cost - - - -Interest cost 1.71 10.51 1.39 8.71Actuarial (gain)/loss (0.56) (1.78) 0.65 1.37Benefits (paid) (3.98) (17.54) (1.51) (10.54)Settlements/transfer In - 1.48 - 1.66Contribution by plan participants - 17.31 - 14.43Present value of obligation at the end of the year 22.81 140.59 22.21 123.64


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`/CroresReconciliation of opening and closing balances of the 2012 2011fair value of the Plan assets: Provident Fund Provident FundFair value of plan assets at the beginning of the year 122.64 102.25Expected Return on Plan Assets 10.42 8.69Employer Contribution 6.97 5.60Settlements/Transfer in 1.48 1.66Employee Contribution 17.31 14.43Benefit paid (17.54) (10.55)Actuarial gain/(loss) on Plan Assets 0.58 0.56Fair value of plan assets at the end of the year 141.86 122.64

`/CroresCost recognised for the year (included under Salaries, 2012 2011Wages, Bonus and Gratuity): Gratuity Provident Gratuity Provident

Fund Fund

Current service cost 3.42 - 2.75 -Company contribution to Provident Fund - 6,97 - 5.60Past service cost - - - -Interest cost 1.71 - 1.39 -Actuarial (gain)/loss (0.56) - 0.65 -Interest guarantee liability - - - 0.17Shortfall in fund - - - 0.83Net cost recognised for the year* 4.57 6.97 4.79 6.60

* Included in Salaries, Wages, Bonus and Gratuity for Gratuity and Contribution to Provident and Other Funds for ProvidentFund under Employee benefits expenses (Refer Note 25).

`/CroresReconciliation of the present value of the Gratuitydefined benefit 2012 2011 2010 2009 2008

Present value of the obligation as at the end of the year 22.81 22.22 17.61 15.34 12.36Fair value of plan assets at the end of the year - - - - -Assets/(Liabilities) recognised in the Balance Sheet (22.81) (22.22) (17.61) (15.34) (12.36)

Provident Fund

2012 2011

Present value of the obligation as at the end of the year (140.59) (123.64)Fair value of plan assets at the end of the year 141.86 122.64Assets/(Liabilities) recognised in the Balance Sheet -** (1.00)** As there is surplus same has not been recognised in Balance Sheet# In the absence of the relevant information from the Actuary, the above details do not include the composition of plan

assets.

38. The Company remits the dividends to its non resident shareholders in Indian Rupees.

39. Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at `152.90 per warrant to certain promoterson a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal numberof equity shares of ` 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75%subscription money.

(b) Raised ` 472.67 Crores by allotment of 3,05,55,713 equity shares of ` 2/- each at a price of `154.69 per equity shareincluding a premium of `152.69 per equity share through Qualified Institutional Placement on October 21, 2009.



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The funds raised through above issues have been utilised as under:

Particulars As at June 30, 2012 As at June 30, 2011(`/Crores) (`/Crores)

Gross Proceeds- Preferential Issue 322.00 322.00- Qualified Institutions Placement 472.67 472.67Less: Share Expenses incurred adjusted with Securities Premium Account during the year (14.55) (14.55)

Net Proceeds 780.12 780.12Utilisation towards- Capital expenditure 87.46 73.34- Acquisition 27.51 25.30- Working Capital 300.00 303.10

Total Utilisation 414.97 401.74UnutilisedCurrently held in Unquoted (Others)Current Investments 365.15 378.38

Total Unutilised 365.15 378.38

40- (a) Subsequent to the year end, the Shareholders of the Company by way of postal ballot have given their approval undersection 293(1)(a) of the Companies Act, 1956 for transfer of the Company’s Computing Products Manufacturing andChannel Business as a going concern on slump sale basis, effective on such date as the Board deems fit for the Company,to a wholly owned subsidiary/group/affiliate/other entity either at book value or for such lump sum considerationbeing not less than the book values.

(b) The Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore has on August 7, 2012 acquiredthe remaining 40% equity stake with effect from January 1, 2012 in HCL Infosystems MEA FZCO.

Consequently, HCL Infosystems MEA FZCO, with effect from January 1, 2012, has become a wholly owned subsidiary ofHCL Insys Pte. Limited, Singapore.

(c) On June 29, 2012, the Company has acquired content for the K-12 education segment from Attano Media and EducationPrivate Limited at a negotiated consideration.

(d) HCL Touch Inc., USA was incorporated as a wholly owned subsidiary on August 29, 2011.

(e) Pursuant to Share Purchase Agreement (SPA) dated January 11, 2011, read with addendum to SPA dated August 26,2011, the Company with effect from October 31, 2011 has sold its entire equity stake in HCL Infinet Limited, the whollyowned subsidiary, reported as Internet and Related Services segment.

This transaction has resulted in a gain of ` 25.55 Crores, which has been included in ‘Other Income’.

(f ) During the year, the Company has with effect from August 1, 2011, transferred its Digital Entertainment business as agoing concern basis to Digilife Distribution and Marketing Services Limited, the wholly owned subsidiary for aconsideration of ` 35 crores, and acquired the Security and Surveillance business of Digilife Distribution and MarketingServices Limited as a going concern on slump sale basis for a consideration of ` 6 Crores.

(g) Techmart Telecom Distribution FZCO, Dubai, in which a subsidiary of the Company has 20% stake, is being dissolved.

41- Contract-in-progress

As at June 30, 2012 As at June 30, 2011(`/Crores) (`/Crores)

Contract revenue recognised for the period 342.60 404.10Aggregate amount of contract costs incurred and 2943.00 2600.40recognised profits (less recognised losses) for allcontracts in progress upto the period endedThe amount of advances received 93.35 76.56Gross amount due from customers for contract-in-progress 1075.87 948.46Gross amount due to customers for contract-in-progress 84.33 79.81


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42- Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited (Formerly known as Guddu Investments (Pondi) Private Limited)

b) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies LimitedHCL Comnet Systems and Services LimitedHCL BPO Services (NI) LimitedSSN College of EngineeringSSN Trust

Joint VentureTechmart Telecom Distribution FZCO, Dubai

c) Key Management Personnel :

Mr. Ajai Chowdhry (Resigned as Whole Time Director with effect from March 31, 2012)Mr. Harsh ChitaleMr. J.V. RamamurthyMr. Sandeep Kanwar

d) Summary of Consolidated Related Party disclosures:Note: All transactions with related parties have been entered into in the normal course of business.

`/Crores

A. Transactions Company having Others Key Management Totalsubstantial interest Personnel

Jun-12 Jun-11 Jun-12 Jun-11 Jun-12 Jun-11 Jun-12 Jun-11

Sales & Related Income 0.00 0.00 148.47 130.88 148.47 130.88- HCL Technologies Limited 131.47 121.26- HCL Comnet Systems and Services Limited 4.20 3.95

Services 0.01 0.01 11.10 27.83 11.11 27.84 - HCL Technologies Limited 7.94 9.90 - HCL BPO Services (NI) Limited 2.20 0.20- HCL Comnet Limited - 16.73

Other Income 4.86 1.81 4.86 1.81- Techmart Telecom Distribution FZCO, Dubai 4.86 1.81

Purchase of Services 6.11 3.92 6.11 3.92- HCL Technologies Limited 6.11 2.77

Assets Purchased - 4.30 - 4.30 - HCL Technologies Limited - 4.30

Remuneration 8.74 7.02 8.74 7.02- Mr. Ajai Chowdhry 3.14 3.32- Mr. Harsh Chitale 2.50 1.38- Mr. J.V. Ramamurthy 1.56 1.30- Mr. Sandeep Kanwar 1.54 1.02

Reimbursements towards expenditurea) Received 0.09 0.02 0.50 0.02 0.59 0.04

- HCL Technologies Limited 0.50 -b) Made 0.27 0.04 1.96 3.81 2.23 3.85

- HCL Technologies Limited 1.92 2.95- HCL Comnet Limited - 0.85

B. Amount due to/from related partiesTrade Receivables 0.06 0.09 66.87 74.83 66.93 74.92Loans and Advances 0.34 0.35 2.38 1.03 2.72 1.38Trade Payables 0.01 2.02 0.01 2.02Advance Received from Customer 0.16 - 0.16 -



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43- a) Loss of ` 0.99 Crores (2011- Profit of ` 0.16 Crores) on sale of fixed assets has been adjusted against the profit/loss onsale of fixed assets.

b) Advertisement, Publicity and Entertainment expenses, wherever on sharing basis, are shown at amounts borne by theGroup.

44- a) Derivative Instruments outstanding at the Balance Sheet date:

The Group has following outstanding derivative as at the reporting date:

Particulars Foreign Currency Average Rate Maximum Maturity PeriodValue / Crores

2012 2011 2012 2011 2012 2011

Foward Contracts to buy USD $8.18 $3.54 56.10 45.41 9 Months 3 MonthsOptions to hedge USD liability $0.80 - 55.93 - 13 Months -

The above dervatives have been undertaken to hedge the foreign currency exposures on Import/Royalty payables as atJune 30, 2012.

b) As on June 30, 2012, the foreign currency exposure that is not hedged by a derivative instrument or otherwise in respectof Trade Payable are ` 216.49 Crores (2011 - ` 351.10 Crores) and in respect of Trade Receivable are ` 38.80 Crores (2011 -` 13.05 Crores).

c) Mark-to-Market Losses provided for June 30, 2012 of ` 0.27 Crores (2011 - ` Nil)

d) The unaccrued forward exchange cover as on June 30, 2012 of ` 7.06 Crores (2011 - ` 1.50 Crores) has been includedunder ‘Other current assets’ as ‘Unamortised Deferred Premium on Forwards Contracts’.

e) Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on December29, 2011, the Company has opted to accumulate the exchange difference arising on translation of foreign currency itemshaving a term of 12 months or more and amortise such exchange difference over the period of the item. Accordingly, aloss of `11.47 Crores (2011 - `Nil) stands deferred as at June 30, 2012.

45- The Group has an interest in the following jointly controlled entity:

Name of the Company Shareholding Incorporated in

Nokia HCL Mobile Internet Services Limited 49% IndiaTechmart Telecom Distribution FZCO, Dubai 20% Dubai

The aggregate amounts of assets, liabilities, income and expenditure to the extent of the interest of the Group in the abovejointly controlled entities are given hereunder:

`/Crores

Particulars Year ended Year endedJune 30, 2012 June 30, 2011

Revenue from operations 130.09 147.19Other Income 3.81 2.21

Total 133.90 149.40Purchases of stock-in-trade 142.78 166.45Changes in inventories of finished goods, work-in-progress and stock-in-trade (12.93) (19.26)Employee benefits expense 0.49 0.19Other expenses 2.02 0.98Depreciation and amortisation expense 0.10 0.03

Total 132.46 148.39Profit before tax 1.44 1.01


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Particulars As at As atJune 30, 2012 June 30, 2011

LiabilitiesShort-term borrowing 4.42 5.94Trade payables 8.59 27.38

Total Liabilities 13.01 33.32

AssetsTangible assets 0.03 0.16Inventories 6.33 19.26Trade receivables 0.01 0.10Cash and bank balances 8.67 13.45Short-term loans & advances 0.10 2.05

Total Assets 15.14 35.02

`/Crores

46- The results of HCL Infosystems South Africa Pty. Limited, HCL Touch Inc and Nokia HCL Mobile Internet Services Limited, ajoint venture with Nokia Corporation, Finland have been taken on the basis of unaudited financial statements for the financialyear ended June 30, 2012. It is unlikely that the audited results would be materially different from the unaudited results.

47- The consolidated financial statements for the year ended June 30, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the CompaniesAct, 1956, the consolidated financial statements for the year ended June 30, 2012 are prepared as per Revised Schedule VI.Accordingly, the previous year figures have also been reclassified to conform to this year’s classification. The adoption ofRevised Schedule VI for previous year figures does not impact recognition and measurement principles followed forpreparation of consolidated financial statements.






125

Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956S. Name of the Financial Holding Company's Net aggregate amount Net aggregate amountNo. subsidiary year to interest in the of Subsidiary Company's of Subsidiary Company's

which subsidiary at profits after deducting profits after deductingaccounts the end of its losses or vice-versa, its losses or vice-versa,

relate financial year so far it concerns so far it concernsmembers of Holding members of HoldingCompany which are Company which arenot dealt with in the dealt with in theCompany's accounts Company's accounts

(Amount in (Amount in` Thousands) ` Thousands)

Shareholding Extent of For the For previous For the For previousNo. of shares holding (%) year ended financial year financial

June years of ended years of30, 2012 the June the

subsidiary 30, 2012 subsidiarysince it since it

became the became theHolding Holding

Company's Company'ssubsidiary subsidiary

1 Digilife Distribution and June 30, 2012 48050000 100 (7,408) (80,765) Nil NilMarketing Services Ltd.

2 HCL Infocom Ltd. June 30, 2012 330000 100 (1,099) (134) Nil Nil3 RMA Software Park March 31, 2012 10000 100 (22,335)* (20,542)* Nil Nil

Pvt. Ltd.4 HCL Insys Pte Ltd., June 30, 2012 6199991 100 66,085.2 26,823 Nil Nil

Singapore in SGD5 HCL Investments June 30, 2012 1 in SGD and

Pte Ltd., Singapore 1575000 in USD 100 34,773.5 21,930 Nil Nil6 Pimpri Chinchwad June 30, 2012 42500 85 (306) (68) Nil Nil

eServices Limited7 HCL Infosystems June 30, 2012 6 in AED 60 94 26,938 Nil Nil

MEA FZCO, Dubai**8 HCL Infosystems June 30, 2012 147 in AED 49 (32) (2,839) Nil Nil

LLC, Dubai**9 HCL Infosystems MEA June 30, 2012 49 in AED 49 (108) (2,054) Nil Nil

LLC, Abu Dhabi**10 HCL Infosystems June 30, 2012 100 in ZAR 100 10,023 Nil Nil Nil

South Africa (Pty) Ltd.,South Africa**

11 HCL Touch Inc., USA June 30, 2012 150 in USD 100 (3,818) NA Nil NA12 HCL Infosystems June 30, 2012 49 in AED 49 (20) NA Nil NA

Qatar WLL, Qatar**13 Techmart Telecom June 30, 2012 2 in AED 20 15,355 NA Nil Nil

Distribution FZCO, Dubai**

* Represents the loss for year ended June 30 considered in consolidated Profit and Loss Account** Shares held through a subsidiary

Statement containing information under Section 212(5)(a) of the Companies Act, 1956Statement whether there has been any, and, if so, what change in the Holding Company's interest in the Subsidiary between theend of the financial year or of the last of the financial years of the Subsidiary and the end of the Holding Company's financial year:

S. Name of Subsidiary Financial Year Change in the Holding Company's interestNo. of Subsidiary in the Subsidiary between the end of the financial

year of the Subsidiary and the end of the HoldingCompany's financial year

1 RMA Software Park Private Limited March 31, 2012 Nil

Statement containing information under Section 212(5)(b) of the Companies Act, 1956S. Name of Subsidiary Financial Year Material change in the money borrowed by

No. of Subsidiary Subsidiary for any purpose other than that ofmeeting current liabilities(Amount in ` Thousands)

1 RMA Software Park Private Limited March 31, 2012 16003


126

Financial Summary of Subsidiaries as at June 30, 2012

(Amount in ` /Lacs)

Particulars Digilife HCL RMA HCL HCL Pimpri HCL Distribution Infocom Software Insys Pte. Investments Chinchwad Infosystems

and Marketing Ltd. Park Ltd., Singapore Pte.Ltd., eServices MEA FZCO,Services Ltd. Pvt. Ltd.# Singapore Limited Dubai

Share Capital 4805.00 33.00 1.00 1981.27 715.49 5.00 151.56

Reserves (1861.58) (26.49) 3423.55 1082.14 648.77 (3.64) 1910.81

Total Assets 13229.89 46.53 6629.00 8960.00 1619.72 0.94 10942.88

Total Liabilities 13229.89 46.53 6629.00 8960.00 1619.72 0.94 10942.88

Investments Nil Nil Nil 2430.79 480.08 Nil 68.63

Turnover 20881.70 8.00 Nil 41601.67 540.91 Nil 13878.66

Profit/(Loss) before taxation (74.08) (10.99) (184.66) 660.85 417.77 (3.60) 124.76

Provision for taxation Nil Nil Nil Nil 70.04 Nil Nil

Profit/(Loss) after taxation (74.08) (10.99) (184.66) 660.85 347.74 (3.60) 124.76

Proposed Dividend Nil Nil Nil Nil Nil Nil Nil

Particulars HCL HCL HCL HCL HCL TechmartInfosystems Infosystems Infosystems Infosystems Touch Telecom

LLC, MEA LLC, Qatar South Africa Inc., DistributiDubai Abu Dhabi WLL, Qatar (Pty) Ltd., USA on FZCO,

South Africa DubaiShare Capital 45.47 22.73 30.31 0.01 0.00 124.04

Reserves (457.76) (351.90) Nil (111.37) 41.65 853.13

Total Assets 7.55 119.31 455.01 162.43 127.60 7350.50

Total Liabilities 7.55 119.31 457.37 162.43 127.60 7350.50

Investments Nil Nil Nil Nil Nil Nil

Turnover Nil 180.04 610.89 2.97 43.37 64996.09

Profit/(Loss) before taxation (53.11) (180.86) (32.67) (100.23) (38.18) 767.74

Provision for taxation (Current/FBT) Nil Nil Nil Nil Nil Nil

Profit/(Loss) after taxation (53.11) (180.86) (32.67) (100.23) (38.18) 767.74

Proposed Dividend Nil Nil Nil Nil Nil Nil

# For the year ended March 31, 2012



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NOTES


NOTES


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